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Short-term impact analysis of fuel price policy change on travel demand in Malaysian cities

Author

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  • Hooi Ling Khoo
  • Ghim Ping Ong
  • Wooi Chen Khoo

Abstract

Malaysia is one of the few countries in the world that provides a fuel subsidy to consumers. Due to the recent economic crisis, the Malaysian Government decided to revise its fuel subsidization policy from a fixed price subsidy to a floating price subsidy dependent on global oil demand. Recognizing that the change in fuel subsidization policy can have an impact on travel behavior, this article investigates the short-term impact of the policy change on private and public transportation in the Klang Valley region of Malaysia. Spectral analyses are performed to investigate if the policy change has an impact on private vehicle travel demand, measured in terms of road traffic, and short-term travel demand elasticity with respect to fuel price is estimated. To measure the impact on the public transportation system, the demand cross-elasticity values of rail transit and buses are also estimated. It was found that traffic flow reduces with an increase in fuel price, although elasticity and cross-elasticity values obtained are low. The article finds that there is a potential mode shift from private vehicles to rail transit with increasing fuel price. It is demonstrated that reducing fuel price subsidy can be an effective travel demand management strategy to alleviate congestion.

Suggested Citation

  • Hooi Ling Khoo & Ghim Ping Ong & Wooi Chen Khoo, 2012. "Short-term impact analysis of fuel price policy change on travel demand in Malaysian cities," Transportation Planning and Technology, Taylor & Francis Journals, vol. 35(7), pages 715-736, May.
    • Handle: RePEc:taf:transp:v:35:y:2012:i:7:p:715-736
    DOI: 10.1080/03081060.2012.710039
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    Cited by:

    1. Burke, Paul J. & Batsuuri, Tsendsuren & Yudhistira, Muhammad Halley, 2017. "Easing the traffic: The effects of Indonesia’s fuel subsidy reforms on toll-road travel," Transportation Research Part A: Policy and Practice, Elsevier, vol. 105(C), pages 167-180.
    2. Ahmed, Kashif & Kamihigashi, Takashi & Matsuo, Miwa, 2023. "Positive fuel price elasticities of expressway traffic flows: Insights for policymakers and management strategists," Transport Policy, Elsevier, vol. 142(C), pages 99-114.
    3. Sun, Huiqian & Jing, Peng & Wang, Baihui & Cai, Yunhao & Ye, Jie & Wang, Bichen, 2023. "The effect of record-high gasoline prices on the consumers’ new energy vehicle purchase intention: Evidence from the uniform experimental design," Energy Policy, Elsevier, vol. 175(C).
    4. Wang, Yacan & Geng, Kexin & May, Anthony D. & Zhou, Huiyu, 2022. "The impact of traffic demand management policy mix on commuter travel choices," Transport Policy, Elsevier, vol. 117(C), pages 74-87.
    5. Kamruzzaman, Md. & Shatu, Farjana & Habib, Khandker Nurul, 2020. "Travel behaviour in Brisbane: Trends, saturation, patterns and changes," Transportation Research Part A: Policy and Practice, Elsevier, vol. 140(C), pages 231-250.
    6. Khoo, Hooi Ling & Asitha, K.S., 2016. "An impact analysis of traffic image information system on driver travel choice," Transportation Research Part A: Policy and Practice, Elsevier, vol. 88(C), pages 175-194.

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