Modeling Fuel Demand for Different Socioeconomic Groups

The fuel demand literature generally focuses on the determination of a single long run or short run price and income elasticity of gasoline for a given country. However, a single elasticity may not dissect the distributional burden faced by different socio-economic groups when faced with a fuel tax or a carbon trading policy (for climate mitigation). Different responses to the same change in price or income are likely to occur, depending on their travel needs, which in turn is contingent upon their income, location of residence and other factors, such as levels of vehicle ownership. This paper investigates the differences in gasoline demand elasticities for different income quintiles. Group-wise aggregated consumer expenditure data for 20 years is used to derive elasticity estimates for the United States. Results show that the elasticities vary for different income quintiles and follow a U-pattern from the lowest to the highest income quintile. The lowest income quintile is found to have the largest price elasticity. The lowest and the highest income quintile appear to be statistically insensitive to any changes in income. The rebound effect also follows the U pattern, with the highest rebound observed among the wealthiest households. Rural households appear to have lower price elasticity than households in urban areas.

• Corporate Authors:

  Transportation Research Board

  500 Fifth Street, NW
  Washington, DC  United States  20001
• Authors:
  • Wadud, Zia
  • Graham, Daniel Joseph
  • Noland, Robert B
• Conference:
  • Transportation Research Board 86th Annual Meeting
  • Location: Washington DC, United States
  • Date: 2007-1-21 to 2007-1-25
• Date: 2007

Language

• English

Media Info

• Media Type: CD-ROM
• Features: Figures; References; Tables;
• Pagination: 29p
• Monograph Title: TRB 86th Annual Meeting Compendium of Papers CD-ROM

Subject/Index Terms

• TRT Terms: Carbon dioxide; Economic elasticity; Fuel conservation; Fuel consumption; Fuel taxes; Gasoline; Low income groups; Middle income groups; Prices; Socioeconomic factors; Travel; Travel demand; Upper income groups
• Subject Areas: Economics; Energy; Environment; Highways; Society; I10: Economics and Administration; I15: Environment;

Filing Info

• Accession Number: 01043492
• Record Type: Publication
• Report/Paper Numbers: 07-0628
• Files: TRIS, TRB
• Created Date: Mar 6 2007 2:38PM