IDEAS home Printed from https://ideas.repec.org/a/sae/enejou/v29y2008i1p113-134.html

Evidence of a Shift in the Short-Run Price Elasticity of Gasoline Demand

Author

Listed:
  • Jonathan E. Hughes
  • Christopher R. Knittel
  • Daniel Sperling

Abstract

Understanding the sensitivity of gasoline demand to changes in prices and income has important implications for policies related to climate change, optimal taxation and national security. The short-run price and income elasticities of gasoline demand in the United States during the 1970s and 1980s have been studied extensively. However, transportation analysts have hypothesized that behavioral and structural factors over the past several decades have changed the responsiveness of U.S. consumers to changes in gasoline prices. We compare the price and income elasticities of gasoline demand in two periods of similarly high prices from 1975 to 1980 and 2001 to 2006. The short-run price elasticities differ considerably: and range from -0.034 to -0.077 during 2001 to 2006, versus -0.21 to -0.34 for 1975 to 1980. The estimated short-run income elasticities range from 0.21 to 0.75 and when estimated with the same models are not significantly different between the two periods.

Suggested Citation

  • Jonathan E. Hughes & Christopher R. Knittel & Daniel Sperling, 2008. "Evidence of a Shift in the Short-Run Price Elasticity of Gasoline Demand," The Energy Journal, , vol. 29(1), pages 113-134, January.
    • Handle: RePEc:sae:enejou:v:29:y:2008:i:1:p:113-134
    DOI: 10.5547/ISSN0195-6574-EJ-Vol29-No1-9
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.5547/ISSN0195-6574-EJ-Vol29-No1-9
    Download Restriction: no
    File URL: https://libkey.io/10.5547/ISSN0195-6574-EJ-Vol29-No1-9?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Serena Ng & Pierre Perron, 2001. "LAG Length Selection and the Construction of Unit Root Tests with Good Size and Power," Econometrica, Econometric Society, vol. 69(6), pages 1519-1554, November.
    2. Kayser, Hilke A., 2000. "Gasoline demand and car choice: estimating gasoline demand using household information," Energy Economics, Elsevier, vol. 22(3), pages 331-348, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bonnet, Odran & Fize, Étienne & Loisel, Tristan & Wilner, Lionel, 2025. "Compensating against fuel price inflation: Price subsidies or transfers?," Journal of Environmental Economics and Management, Elsevier, vol. 129(C).
    2. Sa’d A. Shannak & Jeyhun I. Mikayilov & Rubal Dua, 2024. "Energy price reform to mitigate transportation carbon emissions in oil-rich economies," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 26(2), pages 263-283, April.
    3. Huntington, Hillard G., 2024. "US gasoline response to vehicle fuel efficiency: A contribution to the direct rebound effect," Energy Economics, Elsevier, vol. 136(C).
    4. Anas, Muhammad & Bouri, Elie & Shahzad, Syed Jawad Hussain, 2025. "A comparative bibliometric analysis of five major energy journals," Energy Economics, Elsevier, vol. 151(C).
    5. Sheldon, Tamara L. & Dua, Rubal, 2024. "The dynamic role of subsidies in promoting global electric vehicle sales," Transportation Research Part A: Policy and Practice, Elsevier, vol. 187(C).
    6. Tenney, Katelyn & Cavlovic, Therese, 2026. "Carbon tax earmarking in a conservative state: Choice experiment evidence from Utah," Ecological Economics, Elsevier, vol. 240(C).
    7. Kilian, Lutz & Zhou, Xiaoqing, 2024. "Heterogeneity in the pass-through from oil to gasoline prices: A new instrument for estimating the price elasticity of gasoline demand," Journal of Public Economics, Elsevier, vol. 232(C).
    8. Mamkhezri, Jamal & Khezri, Mohsen, 2026. "Corrigendum to “Vehicle miles traveled induced demand, rebound effect, and price and income elasticities: A US spatial econometric analysis” [Trans. Pol. 158 (2024), 224–240]," Transport Policy, Elsevier, vol. 181(C).
    9. Colina, Armando R. & Gafarov, Bulat & Hilscher, Jens, 2025. "California gasoline demand elasticity estimated using refinery outages," Energy Economics, Elsevier, vol. 148(C).
    10. Belloc, Ignacio & Gimenez-Nadal, José Ignacio & Molina, José Alberto, 2024. "The gasoline price and the commuting behavior of US commuters: Exploring changes to green travel mode choices," Journal of Transport Geography, Elsevier, vol. 121(C).
    11. Fidel Gonzalez & Diya Mazumder, 2025. "Do Declining Vehicle Attributes Eliminate the Direct Rebound Effect?," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 51(2), pages 198-224, April.
    12. Natalia Fabra & Clément Leblanc & Mateus Souza, 2025. "Unpacking the Distributional Implications of the Energy Crisis: Lessons from the Iberian Electricity Market," CESifo Working Paper Series 12093, CESifo.
    13. Zhu, Peng & Chen, Xiaotian & Zhang, Ziyi & Li, Peishan & Cheng, Xi & Dai, Yucheng, 2025. "AI-driven hypergraph neural network for predicting gasoline price trends," Energy Economics, Elsevier, vol. 151(C).
    14. Christopher D. Walker, 2024. "Semiparametric Bayesian Inference for a Conditional Moment Equality Model," Papers 2410.16017, arXiv.org, revised Mar 2026.
    15. repec:osf:osfxxx:tdghp_v1 is not listed on IDEAS
    16. Brian C. Albrecht & Alex Tabarrok & Mark Whitmeyer, 2026. "Chaos and Misallocation under Price Controls," Papers 2602.12066, arXiv.org, revised Mar 2026.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Li, Zheng & Rose, John M. & Hensher, David A., 2010. "Forecasting automobile petrol demand in Australia: An evaluation of empirical models," Transportation Research Part A: Policy and Practice, Elsevier, vol. 44(1), pages 16-38, January.
    2. Vassilis Monastiriotis & Cigdem Borke Tunali, 2020. "The Sustainability of External Imbalances in the European Periphery," Open Economies Review, Springer, vol. 31(2), pages 273-294, April.
    3. Zamani, Mehrzad, 2007. "Energy consumption and economic activities in Iran," Energy Economics, Elsevier, vol. 29(6), pages 1135-1140, November.
    4. Kevin S. Nell & Maria M. De Mello, 2019. "The interdependence between the saving rate and technology across regimes: evidence from South Africa," Empirical Economics, Springer, vol. 56(1), pages 269-300, January.
    5. Juan Carlos Cuestas, 2009. "Purchasing power parity in Central and Eastern European countries: an analysis of unit roots and nonlinearities," Applied Economics Letters, Taylor & Francis Journals, vol. 16(1), pages 87-94.
    6. Antonis Tsitouras & Harry Papapanagos, 2026. "Factors Influencing Income Inequality and Inclusive Growth in Greece: A Long-Run and Short-Run Analysis," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 17(1), pages 2889-2919, February.
    7. R. Santos Alimi, 2014. "ARDL Bounds Testing Approach to Cointegration: A Re-Examination of Augmented Fisher Hypothesis in an Open Economy," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 2(2), pages 103-114, June.
    8. Bajo-Rubio, Oscar & Díaz-Roldán, Carmen & Esteve, Vicente, 2014. "Deficit sustainability, and monetary versus fiscal dominance: The case of Spain, 1850–2000," Journal of Policy Modeling, Elsevier, vol. 36(5), pages 924-937.
    9. Nikeel Kumar & Ronald Ravinesh Kumar & Radika Kumar & Peter Josef Stauvermann, 2020. "Is the tourism–growth relationship asymmetric in the Cook Islands? Evidence from NARDL cointegration and causality tests," Tourism Economics, , vol. 26(4), pages 658-681, June.
    10. Athanasia Gavala & Nikolay Gospodinov & Deming Jiang, 2006. "Forecasting volatility," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 25(6), pages 381-400.
    11. Hauser, Shmuel & Kedar-Levy, Haim & Milo, Orit, 2022. "Price discovery during parallel stocks and options preopening: Information distortion and hints of manipulation," Journal of Financial Markets, Elsevier, vol. 59(PA).
    12. Herzer Dierk, 2022. "Semi-endogenous Versus Schumpeterian Growth Models: A Critical Review of the Literature and New Evidence," Review of Economics, De Gruyter, vol. 73(1), pages 1-55, April.
    13. Afonso, António & Coelho, José Carlos, 2024. "Drivers of fiscal sustainability: A time-varying analysis for Portugal," International Economics, Elsevier, vol. 178(C).
    14. Keen Meng Choy & Hwee Kwan Chow, 2004. "Forecasting the Global Electronics Cycle with Leading Indicators: A VAR Approach," Econometric Society 2004 Australasian Meetings 223, Econometric Society.
    15. repec:wvu:wpaper:05-11 is not listed on IDEAS
    16. Atanu Ghoshray & Issam Malki, 2021. "The share of the global energy mix: Signs of convergence?," Bulletin of Economic Research, Wiley Blackwell, vol. 73(1), pages 34-50, January.
    17. Asensio, Javier & Matas, Anna & Raymond, Jose-Luis, 2003. "Petrol expenditure and redistributive effects of its taxation in Spain," Transportation Research Part A: Policy and Practice, Elsevier, vol. 37(1), pages 49-69, January.
    18. Nyakabawo, Wendy & Miller, Stephen M. & Balcilar, Mehmet & Das, Sonali & Gupta, Rangan, 2015. "Temporal causality between house prices and output in the US: A bootstrap rolling-window approach," The North American Journal of Economics and Finance, Elsevier, vol. 33(C), pages 55-73.
    19. Gomez Zaldivar, M. & Ventosa-Santaularia, D., 2009. "Bilateral Relationship between Consumption and GDP in Mexico and the USA: A Comment," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 9(1).
    20. Kumar, Nikeel Nishkar & Patel, Arvind, 2023. "Nonlinear effect of air travel tourism demand on economic growth in Fiji," Journal of Air Transport Management, Elsevier, vol. 109(C).
    21. Vasudeva N. R. Murthy & Emmanuel Anoruo, 2009. "Are Per Capita Real GDP Series in African Countries Non-stationary or Non-linear? What does Empirical Evidence Reveal?," Economics Bulletin, AccessEcon, vol. 29(4), pages 2492-2504.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:enejou:v:29:y:2008:i:1:p:113-134. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.