NCPA - National Center for Policy Analysis

Motorists Slow To Respond To Rising Gasoline Prices

October 10, 2000

For decades, economists have debated just how elastic the relationship is between gasoline prices and demand. In today's environment of higher fuel prices, motorists are altering their driving habits very little compared to their response when oil prices tripled in the mid-1970s.

"We've seen some effect" of higher gas prices, comments John Lichtblau of the Petroleum Industry Research Foundation, "but it's small."

  • Over the past two years, energy prices have tripled again -- but they remain significantly lower, on an inflation-adjusted basis, than they were in the 1970s and 1980s.
  • That may explain why few people so far have cut back sharply on their driving or searched out more energy-efficient vehicles.
  • Economists have come to the conclusion that higher gas prices change people's behavior only gradually.
  • For example, there is some evidence motorists are switching from premium grades of gasoline to cheaper grades -- and some families have tried to eliminate the small number of trips they deem unnecessary.

So while some 60 percent of the public reports being worried about energy costs, according to the Gallup Organization, oil demand shows little signs of abating in the U.S.

Source: David Leonhardt and Barbara Whitaker, "Higher Fuel Prices do Little to Alter Motorists' Habits," New York Times, October 10, 2000.


Browse more articles on Economic Issues