Publikationen des DIW Berlin

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Short-Run Fuel Price Responses: At the Pump and on the Road Nolan Ritter, Christoph M. Schmidt, Colin Vance In: Energy Economics 58 (2016), S. 67-76

Abstract:

We provide evidence that motorists respond to short-run fluctuations in fuel prices at the gas pump and not on the road. Employing variants of censored panel regression to control for censoring of the dependent variable, we find that the fuel price has a negative impact on the quantity of fuel purchased, but no consistently significant impact on the subsequent distance driven until the next refill. Over the short run, drivers thus appear to cope with high fuel prices by adjusting fuel purchases with each visit to the filling station, but without altering their daily mileage.

JEL-Classification:

C33;Q41;R41

Keywords:

Panel data, Driving behavior, Tanking behavior, Fuel price, Two-sided censoring