Econometric Models of the Demand for Motor Fuel

Burke K. Burright, John H. Enns

ResearchPublished 1975

Reviews recent studies of the response of motor fuel demand to price changes, develops two methodologies for estimating short-run and long-run demand relationships, presents empirical estimates made with both national time-series and state pooled time-series data, and compares these estimates with those of other recent studies. This report concludes that the first-year elasticity of highway motor fuel use with respect to real price is low — probably between -0.1 and -0.3; however, the long-run elasticity is higher — between -0.60 and -0.85. Higher gasoline prices would cause new-car sales to drop temporarily, but improved new-car fuel efficiency could stimulate sales and offset some of the decline. A 10 percent increase in real gasoline price would cause a 2 to 3 percent decline in long-run automobile ownership. A given percentage increase in fuel efficiency would not cause a commensurate decrease in fuel use. (See also R-1560, R-1562.)

Document Details

  • Copyright: RAND Corporation
  • Availability: Web Only
  • Year: 1975
  • Pages: 108
  • Document Number: R-1561-NSF/FEA

Citation

Chicago Manual of Style

Burright, Burke K. and John H. Enns, Econometric Models of the Demand for Motor Fuel. Santa Monica, CA: RAND Corporation, 1975. https://www.rand.org/pubs/reports/R1561.html.
BibTeX RIS

This publication is part of the RAND report series. The report series, a product of RAND from 1948 to 1993, represented the principal publication documenting and transmitting RAND's major research findings and final research.

This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited; linking directly to this product page is encouraged. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial purposes. For information on reprint and reuse permissions, please visit www.rand.org/pubs/permissions.

RAND is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.