Low Gas Prices Encourage Driving - U.S. versus Japan, France, etc

July 2009

 

Per capita driving is influenced by many other factors besides gas price, but a comparison of Japan, France, Germany, UK, and US is still very interesting. These gas prices are "at the pump" gas prices, including taxes. As would be expected, low gas prices are correlated with high per capita vehicle miles traveled (VMT). This is one of many arguments in favor of using "driving pricing" as a way to reduce driving. Driving pricing includes: higher gas taxes, higher parking charges, and congestion charging. Once the cost of driving is permanently increased, people:

  • decrease their amount of driving,

  • shrink the distance between home and work,

  • increase use of transportation alternatives such as carpooling, transit, and biking

  • buy more fuel efficient cars.

 

 

By a "permanent price increase," we mean that a majority of drivers believe higher prices are "here to stay," and begin to change behavior. We have seen gas prices rise and fall over the years based on short-term supply/demand conditions, and these fluctuations are not perceived to be permanent by drivers (producing an inelastic short-term gas demand curve). Given perceived permanence, behavior does not change all at once, as it takes 10+ years to turn over the US vehicle fleet to higher mpg. As far as commute shortening, a significant change can occur in 6 years because: a) studies report average employment duration with a single employer as between 4.0 to 6.9 years, b) median apartment rental duration is 2.1 years. Median home owner duration is 8.2 years (shorter than 8.2 years for condo owners, longer than 8.2 years for single family home owners).

 

  Japan France Germany UK US
1991          
VMT/capita 1,939 3,568 3,592 3,621 6,073
Gas price $3.90 $3.86 $2.87 $2.55 $1.43
1997          
VMT/capita 2,368 4,209 3,961 3,967 5,701
Gas price $3.86 $3.80 $3.70 $3.59 $1.40
% US price 276% 271% 264% 256%  
July '09          
Gas price $5.19 $6.50 $6.70 $6.27 $2.70
% US price 192% 241% 248% 232%  

 

Worldwide, in a German study of 2009 gas prices in 253 countries, US had the 56th lowest prices, with some oil producing nations providing less expensive gas.

 

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