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How Full Is the tank? – Insights on Short-run Fuel Price Reactions from German Travel Diary Data

Author

Listed:
  • Ritter, Nolan
  • Schmidt, Christoph M.
  • Vance, Colin

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 unobserved heterogeneity and censoring of the dependent variable, we find that the fuel price has a large and negative impact on the quantity of fuel purchased, but no significant impact on the subsequent distance driven per day 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.

Suggested Citation

  • Ritter, Nolan & Schmidt, Christoph M. & Vance, Colin, 2013. "How Full Is the tank? – Insights on Short-run Fuel Price Reactions from German Travel Diary Data," Ruhr Economic Papers 401, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    • Handle: RePEc:zbw:rwirep:401
    DOI: 10.4419/86788456
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    References listed on IDEAS

    as
    1. Jonathan E. Hughes & Christopher R. Knittel & Daniel Sperling, 2008. "Evidence of a Shift in the Short-Run Price Elasticity of Gasoline Demand," The Energy Journal, International Association for Energy Economics, vol. 29(1), pages 113-134.
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    3. Manuel Frondel & Jorg Peters & Colin Vance, 2008. "Identifying the Rebound: Evidence from a German Household Panel," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 145-164.
    4. Espey, Molly, 1998. "Gasoline demand revisited: an international meta-analysis of elasticities," Energy Economics, Elsevier, vol. 20(3), pages 273-295, June.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    panel data; households; driving behavior; tanking behavior; fuel price;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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