USA Today Info Graphic Outlines Gasoline Price Elasticity


It speaks for itself.


26 responses to “USA Today Info Graphic Outlines Gasoline Price Elasticity”

  1. Well, I wouldn’t do any of those things if gas went above $10/gallon either, but I don’t really count cause the last time I bought gas, (besides for flexcar, so I didn’t exactly pay for it,) was last year, for my lawnmower.

    My real question is: Those people say they wouldn’t change their lifestyle even if the price went above $10/gallon, but would they really? I mean, for someone with a 25 mile commute in a 25 mpg car, that means they would be spending $100/week just to get to work, or about $250/week for grocery shopping and going to the movies and everything else that you do with your life, which means $1000/month or $12000/year. If you are only making $45000/year, and you pay taxes and live someplace with electricity and running water and have a telephone and eat, (for more than $3/day,) and make your car payment and everything else going on in your life, even if you don’t have children, you just don’t have $12000/year sitting around for gasoline, you’d have to make some tradeoffs. And I highly doubt that most of those people are going to decide that the best solution would be to move to a smaller, (but no closer to work,) house to afford the gasoline, but that is pretty much the choice they’d have if they wanted to keep driving the same car the same distance everyday.

    But I could be wrong, people really love their cars. (My 401k plan keeps sending me these fancy high gloss ads for why I should put more money into my 401k, and they always feature happy looking people in a car, and I throw them away cause I don’t identify with happy looking people in cars. :-)

  2. I wonder how much an effect having employers do something creative with work schdules would help this problem? Have everyone work 4×10 schedules, not have everyone work 8-5, etc? Maybe have City and Metro give some sort of tax break incentives to employers who do this?

  3. Greg,

    I think that’s a great idea. There is currently a proposed bill in California that would allow employees to chose a 4×10 work week. I am not sure if the LA areas already has incentives in place, but I suspect that they do. This would not only help with gas consumption but air quality and congestion. Does anyone know if measures like this are being considered here?

  4. A lot of people at my office work 4x10s, and it makes a lot of sense for a lot of reasons, not just because of gas prices. They save about 1.5 hours by not commuting, and not being forced to take a lunch break. Likewise, for people with children, it saves money on childcare, (those 1.5 hours again, but if you have the spouse that is working 5×8, they pick them up on the 4 days, and the one working 4×10 stay home with them on the other day, saving about 10 hours worth…)

    However, the people that work 4×10’s want to work Mon-Thu or Tue-Fri, and not so much any other schedule, and my employer needs proper coverage of the phones and the like, so some people have to work Mon, Wed-Fri or something annoying, (for them,) like that, so it isn’t anyways as good of a system as it could be. The jobs that it is great for, (small scale software engineering, for instance,) are the same jobs that people could, (and probably would, if gas was $10/gallon,) telecommute to…

  5. I wonder about the emotional/rational factor in this poll. For example, 18% of the respondents said they would use mass transit if gas is at or below $4/gallon, but only 6% of the respondents would switch to transit if gas goes to $5-$8/gallon and only 1% at $8-10. That doesn’t make any sense.

    I think people literally can’t imagine $5/gallon gas and therefore can’t imagine what they’ll do when it hits $8. How else to explain fewer people willing to change behavior as price increases? If it stayed level we could talk about elasticity, but the lack of rationale in the responses suggests something else is at work.

    One last point: The final bar graph that represents the percent of people who won’t change behavior regardless the price of gas suggests that the respondents aren’t really thinking logically. Who would be willing to commute those 25 miles at $10/gallon? Apparently, 86% of Americans.

  6. Why isn’t TriMet raising its fares in lock step with fuel price increases? It only seems logical to me that EVERYONE be forced to pay their “fare” share in this game.

  7. Note the margin of error – the spread could be as large as 10% points, which is larger than some of the results on the higher price end – so the results are not too trust worthy.

    While the lack of elasticity is clear – the real test would be a survey that also factored in the increased cost of groceries, goods, and other items requiring gas to deliver. $10 a gallon would probably make your delivery pizza move into the $50 range.

  8. Why isn’t TriMet raising its fares in lock step with fuel price increases?

    TriMet in fact has a policy that causes semi-automatic increases when the price of diesel goes up. Thus a number of $0.05 increases over the last couple of years.

  9. Off-topic – but if gas prices pushed $10 a gallon, you can be sure that your heating, cooling, and electricity bills would similarly skyrocket… $1000 a month utility bills, anyone?

    A friend of mine paid $600/mo in Arizona to air condition their 7,000 ft^2 house…

  10. I tend to think that the poll is not an accurate representation of what would actually happen with higher gas prices. My guess is that people responded based on their own personal history and assumptions/perceptions of things being different. For example, transit options are at best poor for many people and they may be thinking that they don’t ever want to use them. But if better transit was provided, they might re-consider taking it.

    But another part of the equation is that many people live in lower-density development where lots of driving is about the only option. And the increased cost of infrastructure and services it needs is often subsidized.

  11. Who would be willing to commute those 25 miles at $10/gallon? Apparently, 86% of Americans.

    I think that is misreading the information. Most people don’t have 25 mile commutes, so the cost of gas is not a major factor in deciding how they will get to work.

  12. In regards to working 4/10, it’s inconclusive that this strategy really reduces VMT significantly. People don’t simply stay at home; they’re typically out driving during their day off, running errands, etc. It would make a more positive impact for people with 25-mile commutes, but as Ross points out, that’s not the case for most Americans. Telework is a better strategy for eliminating commute trips, IMHO.

  13. According to the Census data, average commute in the U.S. is 12.1 miles – I assumed that was one-way, but I am not sure.

    But that’s besides the point. My main point was that people can’t imagine gas prices much higher than they are now, so they can’t imagine changing their behavior any more than they already have.

  14. Scott Cohen wrote:
    I wonder about the emotional/rational factor in this poll. For example, 18% of the respondents said they would use mass transit if gas is at or below $4/gallon, but only 6% of the respondents would switch to transit if gas goes to $5-$8/gallon and only 1% at $8-10. That doesn’t make any sense.

    I think the way the poll is structured the respondents only chose their choke point for changing their behavior. So, the 18% who said they would change at $4/gal aren’t included in the responses for higher prices, because you can assume they made their change well before gas hit $10/gal.

  15. You are right about the commute, I should have used a different set of numbers: ~12000 miles/year at 25 mpg and $10/gallon means $5000/year, (up from $1000/year based on last winter’s prices.)

    I think a lot of people also believe that the current high gas prices are temporary, and that a few years from now gas will go back to $1.50/gallon. (Most people haven’t though too much about why the prices are high: they’ve heard the sound bite about lack of refining capacity, or hurricane season or problems in Nigeria or whatever, and assume that these temporary problems that will be solved in the short term, (even though those sorts of problem have been going on forever, and didn’t cause price increases like this.)) As such, the question came across (to them,) as “would you sell your big house in the suburbs and move to the city, only to move back a few year later when the gas prices go down?” (I’d say no in that situation too.)

  16. y main point was that people can’t imagine gas prices much higher than they are now, so they can’t imagine changing their behavior any more than they already have.

    I think what people say they will do and what they will actually do are different. But I also think people here are way overestimating the impact of gas prices on people’s chosen behavior.

    if gas prices pushed $10 a gallon, you can be sure that your heating, cooling, and electricity bills would similarly skyrocket… $1000 a month utility bills, anyone?

    Exactly right. And changing jobs won’t save you anything on your heating bill. If gas is $10 per gallon a lot of things are going to be more expensive.

    You are right about the commute, I should have used a different set of numbers: ~12000 miles/year at 25 mpg and $10/gallon means $5000/year, (up from $1000/year based on last winter’s prices.)

    So is it worth an extra $4000 per year to live in the burbs? I think for some people it most certainly will be, especially if you consider that the price of everything else will have gone up as well.

    I would also point out if people really did cut their use of gasoline to 20% of its current level in order to keep their gas costs level, it is unlikely the price of gasoline going to $10 per gallon. To the extent people are correct that the price has an effect on behavior, behavior also will have an effect on the price.

  17. If gasoline prices really continue to rise and stay there for several years, this will be an interesting story to follow. History has shown us that in the short run, very little substantial behavioral changes occur in driving patterns, but when gas stays high, people will do everything they can to continue to drive – including moving and purchasing more fuel efficient vehicles, let along cutting back on discretionary spending…

  18. I highly doubt that most of those people are going to decide that the best solution would be to move to a smaller, (but no closer to work,) house to afford the gasoline, but that is pretty much the choice they’d have if they wanted to keep driving the same car the same distance everyday.

    It’s hard to say, especially since there is no honest supply and demand within the passenger transportation industry any longer, what people really would do. I can gaurantee you though that the poll is crap, I’d also say that more people would move closer to where they need to get to than you might think. Empirical evidence of the US history should point to that in some degree. Currently though with the urban highway planning mythos and all that other crap its no wonder people think or say they’d keep doing the same things. The questions probably weren’t even technically asked or marked properly by the test/poll givers.

    Greg Thompkins: Why isn’t TriMet raising its fares in lock step with fuel price increases? It only seems logical to me that EVERYONE be forced to pay their “fare” share in this game.

    I keep asking the same question? So why where the private “paid for by passengers fare” systems destroyed and replaced by high subsidy, urban planning nightmares called highways and interstates? …and why are they still not covered 100% by direct user fares?

    On another note though, more direct to your question, they have risen fares, but legally aren’t aloud to do it but so much at a time. The same reason they have a problem with it is the same reason the city ran various STreetcar Operations out of business by regulating their price out of lockstep with the market.

    hmmmm, the complexity of it all. :(

    zilfondel Says: Off-topic – but if gas prices pushed $10 a gallon, you can be sure that your heating, cooling, and electricity bills would similarly skyrocket… $1000 a month utility bills, anyone?

    That’s not really that off topic. Because seriously, gas hits 10 a gallon anytime soon – say within the next 5 years, we’ll have lots of other things to worry about besides something as mundane as our commute. We’ll be far more worried about how and what we’re going to be eating. If it shoots much farther past $10 a gallon in the next 5 years – say 15-20, we’re talking collapse. AT that point your main concern, if you’ve managed to survive, is the caliber, range, and precision of your capability to hunt and survive. I can rest assure everyone, history providing more than enough evidence, that during times of dire stress, humanity doesn’t stay very civil, the law of nature comes to play strong, and only the strongest would stand at the end of the day during high gas prices.

  19. If fuel goes up to that much, it would be mayhem! Just another reason why this densification experiment should be ended. If people had those evil “big yards” they could put them to good use and grow food in them! Kinda hard to do in the Pearl or elsewhere in town where there is no ground to grow food on. Maybe they could cut down the trees on waterfront and put fields in there instead of using the space for frivolous “fun centers”.

  20. ^ I think that there are enough hobby farms in the Willamette Valley that they could probably stop growing grass seed, and switch to growing actual foodibles for the cities. Then all the hobby horse farmers could simply hook up a wagon and wheel it into town…

    I’m actually serious about this, tho – as funny as it seems!

  21. Havana grows a lot of it’s food in the city limits, and it is twice as dense as Portland, (and has 3M in the metro area.) The trick is to not waste all your land with large single family houses: 5 houses on top of each other takes the same amount of land as 1.

    However, I personally hope that peak oil isn’t going to force us to become an subsistence agrarian society. I rather like this civilization experiment that we’ve got going on here, and that requires that we specialize instead of all become farmers. (Although, I should admit I’m hedging my bets by raising vegetables and chickens in my yard, and now I’m looking at fish farming…)

  22. I assume you’re just being cynical by comparing Portland to Havana, a city in a communist 3rd world country. I really don’t think the shortage of oil or price of it is going to affect us much. We’re the most powerful and richest country in the world and if we need it we have the means to take it by force if necessary. Other countries (like Cuba) don’t have this capability.

  23. Greg,

    Its too bad you fall into the trap that our trustworthy government has set for you. How does Havana being in a communist country change anything about the statement? Also, how does it being a communist country make it “third world”? You do realize that our largest trade partner is…well, communist? The one we should truly be afraid of, either due to their pollution killing us or us being absorbed by their faster growing economy.

    The richest country in the world, with one of the worst health care implementations too. Wow, wealth for the few…so how is this good again? Oh, right…because poverty and crime are good for society, wait…society doesn’t matter, we can be rich!!

    I think some of you are giving the Americans that responded to the poll too much credit. I really don’t think most Americans can comprehend $8/gallon fuel prices…so they didn’t really think about the true impact. This would mean *everything* would cost more. All of that food you buy in the grocery store surely depends on a lot of energy to harvest and process. The unfortunate side of this is that usually the farmers suffer first. It takes much longer for the price they receive for goods produced to increase to cover the increased cost of production. The middleman, they definitely get their price increase…and the larger margin on it too.

    Its about time we see $5.00+/gallon of fuel. It is the only way to curb the greedy consumption of resources. We need to start phasing in carbon tax (or equivalent) into fossil fuels now, to start curbing the consumption. The higher gas prices are already having a positive impact, finally car companies are focusing (or at least pretending) economy in the miles per gallon scale, instead of the horsepower scale.

  24. So what if gas hits $10 a gallon? Everything else will just increase fivefold, too. Then I’m sure the politicians will see it necessary to just raise the minimum wage, and the price of everything will increase. It’s all relative. We’ll be paying more but making more so we’ll be in the same boat. It’s called inflation. Someome told me the other day that we are re-living the 70’s all over again. I was born in the 70’s so I don’t remember what it was like.

  25. (Cuba isn’t third world, it is second world. But that is besides the point.)

    Greg, you were the one advocating that we lower the density of Portland so that we could survive higher oil prices, and my point is that density isn’t the only metric you need to look at, you also need to look at land use. If you have 10 people per acre, and 2/3rd the land is covered in asphalt and roofs, but you can grow enough food to feed those people, then logically, you can actually put 20 people an acre on the land, if you reduce the amount of roof and asphalt area to 1/3rd. Part of the way you do that is you put rooftop gardens in, which are expensive, compared to regular shingle roof’s, so you need to make sure the building are worth covering in the first place… That means tall buildings with a lot of people in them. That is what Cuba has done.

    Your point about being the most powerful country is interesting: Iraq exports less oil today as than it did 5 years ago, so it looks like the best way to keep oil flowing is to not invade countries. I’m not sure what the point of being the most powerful is, if everyone knows that you can’t use the army because it will destroy your economy, but…

    And, yes, you are right, as the price of gasoline goes up, the price of everything, (in this country,) goes up. Of course, a lot of people get the short end of the stick on that, but you can always hope that it isn’t you. However, in places like Europe or Japan where their economy is less dependent on gasoline, their prices don’t rise as fast. The result is that the dollar loses a lot of value, and suddenly we aren’t the richest country in the world… (So much for being the most powerful.)

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