Americans Driving Less

by on May 25, 2008 at 12:03 am in Economics | Permalink

11 billion fewer miles were driven this March compared to last March.

Hat tip to Calculated Risk.

1 Speedmaster May 25, 2008 at 9:43 am

The ‘brilliant’ Obama gets a taste of the law of demand. 😉

Obama says fuel prices will change car habits | Politics | Reuters
“CHICAGO (Reuters) – Barack Obama said on Saturday Americans would start changing the kinds of cars they drive if gasoline prices continue to climb”

2 Gregory Rehmke May 25, 2008 at 12:37 pm

People are driving less because gas prices are higher, of course. The April and May numbers should show a steeper reduction, since prices are considerably higher.

At the link is this quote:

‘ “That Americans are driving less underscores the challenges facing the Highway Trust Fund and its reliance on the federal gasoline excise tax,† said Acting Federal Highway Administrator Jim Ray. ‘

It is not clear what the “challenges” are. If people drive less, govt. receives less excise tax income, but there is less wear on roads to be repaired.

3 Alexandre May 25, 2008 at 7:40 pm

these statistics shown just as ‘absolute numbers’ don’t reveal much. I looked at the original article, and they mention a 4.7 percent decline relative to March/2007.

A good accomplishment, but still small when compared with the percentage change in prices – gasoline itself is quite inelastic since there are no close substitutes – but we can think of other transport methods as substitutes, to use less gasoline – as a mean to “save it”. But the burden of these “savings” might still be too high for most people, if we think in the opportunity cost of NOT using a car: it gives flexibility to choose where to go, comfort, saves time, etc. So these “savings” would be just irrelevant in terms of its share in the budget constraint to justify a consumption change.

A small portion of the market might have been really affected, others might have decreased consumption in an attempt to “give the example”, but these cases don’t look that much significative in the aggregate.

4 John Thacker May 26, 2008 at 2:24 pm

A good accomplishment, but still small when compared with the percentage change in prices – gasoline itself is quite inelastic since there are no close substitute

Yes, absolutely short-term. All the SUVs bought during cheap gas aren’t going to magically disappear. At the same time, higher gas mileage cars sold now will be on the road for a long time.

The effects are, unsurprisingly, even steeper when you look at new car sales. SUVs are way, way down.

5 aaron May 27, 2008 at 7:31 am

Also very important to note, fuel consumption is essentially the same. Fuel efficiency is declining. I believe this is happening even though fuel economy is improving for cars.

I have a couple ideas on why this is happening, and am interested in hearing others.

Fuel efficient driving is too complicated for most people to understand, so price pressure actually promotes bad driving habits.

Giffen Behavior in Driving: Perhaps there is Giffen Behavior in driving. If the cost of driving goes up, we may get more demand for driving. People are pressured to forgoe luxery driving during off-peak hours, but must drive more during peak hours to produce a needed increase in income.

Supporting the first, I did a back of an envelop calculation of when it may be worthwhile for a person to slow down. Basically, a person’s time need to be worth less than about $5 for them to slow down from around 70mph.

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8 macheal May 13, 2009 at 4:53 am

all the things should be careful

9 aure May 13, 2009 at 4:56 am

just practice your driving skills

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