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gasoline_elasticity

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									Gasoline Price-Elasticity
A spreadsheet by Charles Komanoff
Telephone: (212) 260 5237 / Email: kea@igc.org / Website: www.komanoff.net
Latest edition:   28-Jun-06

Purpose of this spreadsheet
This spreadsheet was begun in 2004 and is updated monthly to estimate the short-term price-elasticity of demand
for gasoline in the U.S. It takes data from on-line U.S. DOE/EIA databases to infer price-elasticity by comparing
monthly consumption and price data with year-earlier data.

Preliminary results of this spreadsheet
The monthly price-elasticity figures "revealed" by the data are shown in the right-most column ("L") of the next spreadsheet
tab, 1-yr comparison. They range from (minus) 0.07 to 0.54 and average (minus) 0.21 for the months in this spreadsheet
(through May 2006). These data suggest that the price-elasticity of gasoline demand, while small, is greater than zero.
Note: the price elasticities here are predicated on an "income elasticity" of 1, such that, all things equal, each 3% growth in
GDP would create 3% growth in gasoline use. If the income elasticity were instead assumed to be 2/3, then the
calculated price elasticities would be roughly half of the values shown.
Please also see the third tab, Moving Avgs, for "statistically smoothed" calculations of the gas price elasticities, and
the tab after that, 2-yr comparison, for elasticity estimates based on comparisons over 24 months rather than 12.
Another tab, Full Years, dispenses with monthly data and compares full-year data. It indicates that over a very long time
horizon (15 years), the price-elasticity of gasoline is considerable, though its "true" value depends on the assumed income-
elasticity. If the income elasticity is assumed to equal one, then the revealed 15-yr price elasticity is (negative) one.
If the income elasticity is assumed to equal 2/3, then the revealed 15-yr price elasticity is approximately (negative) 0.4.

About Fuel Price Elasticities
"Price sensitivity" refers to the tendency of prices (what people pay for a good) to affect how much of that good they
consume. In general, an increase in price reduces consumption. Economists measure this effect using "elasticity,"
which is defined as "the percentage change in consumption that results from a one-percent change in price." For example,
if a 10% price increase causes a 3% reduction in consumption, the elasticity is -0.3.
Many studies have investigated the effects of fuel price changes. There are two general impacts. In the short-run (typically,
less than two years) gas price increases tend to reduce driving. Over the long-run, gas price increases lead people to buy
more fuel-efficient vehicles. Both contribute to reduced fuel consumption over the long run. Other changes in response
to higher gas prices include leaving the less-efficient vehicle at home (when households have that choice), and re-organizing
location decisions so that trips are shorter (again, when that choice is available). For more information on elasticities in
general, and fuel price elasticities in particular, see documents referenced below.

If price-elasticity is non-zero, how come gas consumption hasn't dropped?
Most commentators point to rising gas usage as proof that rising gas prices haven't deterred consumers.
Reality is a bit more complex. The data here show that gas use, though rising, has increased by less than
it would have if prices had been flat. In effect, the rise in gas usage that ordinarily accompanies rising economic
activity has masked the modest though real contraction in usage due to higher prices.
In a related confusion, many commentators have overstated the rise in gas prices. For example, New York Times
economist columnist Joseph Nocera wrote last year (10-Sept-05) that "people have not begun to change their
energy habits … even as gasoline at the pump has more than doubled in the last year or so." Presumably Mr. Nocera
was referring to the situation before Hurricane Katrina pushed gasoline prices above $3 a gallon, since consumption
data weren't then available for this new period, and the Times and other media did devote much attention to anecdotal
accounts of individual behavior change spurred by $3 gas. As the data through August 2005 show, gas prices adjusted
for general inflation were only 20-30% higher than prices a year or two earlier. In fact, the "real" gas price for the
highest-price month, August 2005, was only 55% higher than the price for the lowest-price month going back to
the start of 2003 (Dec. 2003). Finally, for all of 2005 the real increase in gas prices over 2004 was only 18%.
The point is that price is affecting usage -- not hugely, but enough to belie the notion that gasoline consumption is
completely inelastic with respect to its price.

For provocative essays on the importance of energy price-elasticity                      Go to: www.komanoff.net/fossil
General References on Price Elasticities (courtesy of Todd Litman)
BTE, Transport Elasticities Database Online (www.dynamic.dotrs.gov.au/bte/tedb/index.cfm)

Stephen Glaister and Dan Graham, The Effect of Fuel Prices on Motorists, AA Motoring Policy Unit and the UK Petroleum Industry Association
(http://195.167.162.28/policyviews/pdf/effect_fuel_prices.pdf), 2000.

Phil Goodwin, Joyce Dargay and Mark Hanly, Elasticities Of Road Traffic And Fuel Consumption With Respect To Price And Income: A Review, ESRC
Transport Studies Unit, University College London (www.transport.ucl.ac.uk), commissioned by the UK Department of the Environment, Transport and
the Regions (now UK Department for Transport), 2003.

Todd Litman, "Appropriate Response To Rising Fuel Prices," Victoria Transport Policy Institute (www.vtpi.org), 2005.

Todd Litman, "Transportation Elasticities: How Prices and Other Factors Affect Travel Behavior," Victoria Transport Policy Institute
(http://www.vtpi.org/elasticities.pdf), 2005.

Olof Johansson and Lee Schipper, “Measuring the Long-Run Fuel Demand for Cars,” Journal of Transport Economics and Policy, Vol. 31, No. 3, 1997,
pp. 277-292.

Tae Hoon Oum, W.G. Waters II, and Jong-Say Yong, “Concepts of Price Elasticities of Transport Demand and Recent Empirical Estimates, Journal of
Transport Economics, May 1992, pp. 139-154. This article is based on A Survey of Recent Estimates of Price Elasticities of Travel Demand, Policy
Planning and Research, Working Papers, World Bank (www.worldbank.org/transport/publicat/inu-70.pdf), 1990.

Richard H. Pratt, “Introduction,” Traveler Response to Transportation System Changes, Interim Handbook, TCRP Web Document 12
(www4.trb.org/trb/crp.nsf/All+Projects/TCRP+B-12A,+Phase+II ).

TRACE, Elasticity Handbook: Elasticities for Prototypical Contexts, TRACE; Costs Of Private Road Travel And Their Effects On Demand, Including
Short And Long Term Elasticities; Prepared for the European Commission, Directorate-General for Transport, Contract No: RO-97-SC.2035,
(www.cordis.lu/transport/src/tracerep.htm), 1999.

VTPI, "Transportation Elasticities," Online TDM Encyclopedia , Victoria Transport Policy Institute (www.vtpi.org), 2005.
y Association


me: A Review, ESRC
ment, Transport and




 Vol. 31, No. 3, 1997,


Estimates, Journal of
 Demand, Policy




emand, Including
Gasoline Price-Elasticity
A spreadsheet by Charles Komanoff
Telephone: (212) 260 5237 / Email: kea@igc.org / Website: www.komanoff.net
Latest edition:    28-Jun-06
How to follow and interpret this spreadsheet
Changes in gasoline use from month to month or year to year within a society (e.g., the U.S.) have long been
modeled as a function of changes in "income" (Gross Domestic Product) and the price of gasoline (adjusted
for inflation, I.e., in "real" terms). I use this approach here to infer the price-elasticity of gasoline (the responsiveness
 of gasoline usage to changes in price).
I assume that the income-elasticity of gasoline demand is 1, I.e., that each 3% expansion in economic activity induces
a 3% increase in gasoline usage (assuming the price has remained the same). Using this assumption, along with actual
rates of change in gas use, inflation-adjusted gas prices and GDP, one can infer the price-elasticity of gasoline demand.
(If you have this spreadsheet in electronic form, you may substitute your own estimate of income-elasticity for my value
of 1. Assuming a lower income-elasticity results in a lower calculated price-elasticity.

Data and Calculations
This part of the analysis applies an income-elasticity of 1 to monthly usage, income and price data for 1/2003 onwards,
to estimate the short-term price-elasticity of gasoline demand, beginning in January 2004.

                                                                              Actual        Avg     Inflation  Inflation-     Incrs in
                          Motor Incrs in      GDP,       Incrs in Expected   incrs in       U.S.       index   adjusted     infl-adj'd
                       Gasoline Product annual              GDP    incrs in gas use,       Retail    used to    average     gas price
                        Product Supplied    rate in     from yr- gas use,      minus       Motor      adjust    gasoline     from yr-
                       Supplied  from yr billions         earlier based on expected         Gas          gas price (1982-      earlier
                    (1000 bbl/d)  earlier of 2000$        month       GDP       incrs      Price      prices 84 = 100)         month

2003 January             8,414                10,124                                     $1.557        181.7      $0.86
2003 Feb                 8,525                10,139                                     $1.686        183.1      $0.92
2003 March               8,602                10,169                                     $1.791        184.2      $0.97
2003 April               8,838                10,200                                     $1.704        183.8      $0.93
2003 May                 9,042                10,230                                     $1.587        183.5      $0.86
2003 June                9,170                10,291                                     $1.558        183.7      $0.85
2003 July                9,192                10,351                                     $1.567        183.9      $0.85
2003 August              9,411                10,411                                     $1.671        184.6      $0.91
2003 Sept                8,926                10,441                                     $1.771        185.2      $0.96
2003 October             9,108                10,472                                     $1.646        185.0      $0.89
2003 Nov                 8,946                10,503                                     $1.578        184.5      $0.86
2003 Dec                 9,011                10,539                                     $1.538        184.3      $0.83
2004 January             8,680        3.2%    10,576       4.5%       4.5%       -1.3%   $1.635        185.2      $0.88          3.0%
2004 Feb                 8,743        2.6%    10,613       4.7%       4.7%       -2.1%   $1.715        186.2      $0.92          0.0%
2004 March               8,922        3.7%    10,643       4.7%       4.7%       -0.9%   $1.809        187.4      $0.97         -0.7%
2004 April               9,067        2.6%    10,674       4.6%       4.6%       -2.1%   $1.875        188.0      $1.00          7.6%
2004 May                 9,178        1.5%    10,704       4.6%       4.6%       -3.1%   $2.050        189.1      $1.08         25.3%
2004 June                9,237        0.7%    10,739       4.4%       4.4%       -3.6%   $2.083        189.7      $1.10         29.5%
2004 July                9,243        0.6%    10,774       4.1%       4.1%       -3.5%   $1.982        189.4      $1.05         22.8%
2004 August              9,424        0.1%    10,809       3.8%       3.8%       -3.7%   $1.941        189.5      $1.02         13.2%
2004 Sept                9,030        1.2%    10,838       3.8%       3.8%       -2.6%   $1.934        189.9      $1.02          6.5%
2004 October             9,103       -0.1%    10,868       3.8%       3.8%       -3.8%   $2.072        190.9      $1.09         22.0%
2004 Nov                 9,070        1.4%    10,897       3.8%       3.8%       -2.4%   $2.053        191.0      $1.07         25.7%
2004 Dec                 9,219        2.3%    10,931       3.7%       3.7%       -1.4%   $1.926        190.3      $1.01         21.3%
2005 January             8,775        1.1%    10,965       3.7%       3.7%       -2.6%   $1.866        190.7      $0.98         10.8%
2005 Feb                 8,798        0.6%    10,999       3.6%       3.6%       -3.0%   $1.960        191.8      $1.02         10.9%
2005 March               8,996        0.8%    11,029       3.6%       3.6%       -2.8%   $2.107        193.3      $1.09         12.9%
2005 April               9,130        0.7%    11,059       3.6%       3.6%       -2.9%   $2.325        194.6      $1.19         19.8%
2005 May                 9,257        0.9%    11,089       3.6%       3.6%       -2.7%   $2.257        194.4      $1.16          7.1%
2005 June                9,380        1.5%    11,127       3.6%       3.6%       -2.1%   $2.218        194.5      $1.14          3.9%
2005 July                9,451        2.2%    11,165       3.6%       3.6%       -1.4%   $2.357        195.4      $1.21         15.3%
2005 August              9,454        0.3%    11,202       3.6%       3.6%       -3.3%   $2.541        196.4      $1.29         26.3%
2005 Sept                  8,897        -1.5%    11,218         3.5%        3.5%        -5.0%   $2.969         198.8        $1.49        46.6%
2005 Oct                   9,013        -1.0%    11,233         3.4%        3.4%        -4.3%   $2.830         199.2        $1.42        30.9%
2005 Nov                   9,079         0.1%    11,248         3.2%        3.2%        -3.1%   $2.387         197.6        $1.21        12.4%
2005 Dec                   9,246         0.3%    11,297         3.3%        3.3%        -3.1%   $2.230         196.8        $1.13        12.0%
2006 Jan                   8,727        -0.5%    11,346         3.5%        3.5%        -4.0%   $2.359         198.3        $1.19        21.6%
2006 Feb                   8,836         0.4%    11,395         3.6%        3.6%        -3.2%   $2.354         198.7        $1.18        15.9%
2006 Mar                   9,129         1.5%    11,444         3.8%        3.8%        -2.3%   $2.444         199.8        $1.22        12.2%
2006 Apr                   9,140         0.1%    11,493         3.9%        3.9%        -3.8%   $2.801         201.5        $1.39        16.3%
2006 May                   9,330         0.8%    11,542         4.1%        4.1%        -3.3%   $2.993         202.5        $1.48        27.3%
Average price-elasticity (based on 1-yr comparisons) for all months shown:
Assumed income-elasticity of gasoline demand                                 1.00
(The assumed value is crucial to inferring the price-elasticity; the higher the assumed income-elasticity, the steeper the derived price-elasticity, and vice-versa)

Sources
Usage data:          http://tonto.eia.doe.gov/merquery/mer_data.asp?table=T03.04            (Column E, All Types of Gasoline, U.S. City Avg, Retail Price)
                     Note that EIA habitually revises the most recent datum several weeks after posting; most revisions are downward.
Price data:          http://tonto.eia.doe.gov/merquery/mer_data.asp?table=T09.04            (Column E, All Types of Gasoline, U.S. City Avg, Retail Price)
CPI data:            gathered monthly from http://www.bls.gov/cpi/home.htm#data. "All Urban Consumers," 1982-84=100.
GDP data:            http://www.bea.gov/bea/dn/gdplev.xls              (see worksheet "tab" in this spreadsheet GDP data)
 Gasoline
    Price-
 elasticity
calculated
   for this
    month




     -0.27
     -0.12
     -0.12
     -0.15
     -0.28
     -0.41
     -0.17
     -0.09
     -0.07
     -0.24
     -0.28
     -0.22
     -0.15
     -0.39
     -0.54
     -0.09
     -0.13
                    -0.11
                    -0.14
                    -0.25
                    -0.26
                    -0.19
                    -0.20
                    -0.19
                    -0.23
                    -0.12
                    -0.21


price-elasticity, and vice-versa)



U.S. City Avg, Retail Price)

U.S. City Avg, Retail Price)
Gasoline Price-Elasticity
A spreadsheet by Charles Komanoff
Telephone: (212) 260 5237 / Email: kea@igc.org / Website: www.komanoff.net
Latest edition: 28-Jun-06

Column L has the results -- the observed price-elasticity of U.S. demand for gasoline.

All data shown are 3-month moving averages of data shown in next "tab" (Monthly Data).
(Thanks to Vince Taylor for that suggestion.)

Please refer to the previous worksheet "tab," Monthly Data, for a detailed explanation of the purpose and methodology
of this spreadsheet.


                              Year               Year                                                 Real     Year Observed
                    Usage   Change       GDP   Change Expected Variance         Price GDP Defl       Price   Change Elasticity
2003 January
2003 Feb
2003 March          8,514             10,144                                $   1.68   183.0     $   0.92
2003 April          8,655             10,169                                $   1.73   183.7     $   0.94
2003 May            8,827             10,200                                $   1.69   183.8     $   0.92
2003 June           9,017             10,240                                $   1.62   183.7     $   0.88
2003 July           9,135             10,291                                $   1.57   183.7     $   0.86
2003 August         9,258             10,351                                $   1.60   184.1     $   0.87
2003 Sept           9,176             10,401                                $   1.67   184.6     $   0.90
2003 October        9,148             10,441                                $   1.70   184.9     $   0.92
2003 Nov            8,993             10,472                                $   1.67   184.9     $   0.90
2003 Dec            9,022             10,505                                $   1.59   184.6     $   0.86
2004 January        8,879             10,539                                $   1.58   184.7     $   0.86
2004 Feb            8,811             10,576                                $   1.63   185.2     $   0.88
2004 March          8,782      3.1%   10,610     4.6%      4.6%     -1.5%   $   1.72   186.3     $   0.92     0.7%
2004 April          8,911      3.0%   10,643     4.7%      4.7%     -1.7%   $   1.80   187.2     $   0.96     2.3%      -0.75
2004 May            9,056      2.6%   10,674     4.6%      4.6%     -2.1%   $   1.91   188.2     $   1.02    10.2%      -0.20
2004 June           9,161      1.6%   10,706     4.5%      4.5%     -2.9%   $   2.00   188.9     $   1.06    20.4%      -0.14
2004 July           9,219      0.9%   10,739     4.4%      4.4%     -3.4%   $   2.04   189.4     $   1.08    25.9%      -0.13
2004 August         9,301      0.5%   10,774     4.1%      4.1%     -3.6%   $   2.00   189.5     $   1.06    21.6%      -0.17
2004 Sept           9,232      0.6%   10,807     3.9%      3.9%     -3.3%   $   1.95   189.6     $   1.03    13.8%      -0.24
2004 October        9,186      0.4%   10,838     3.8%      3.8%     -3.4%   $   1.98   190.1     $   1.04    13.7%      -0.25
2004 Nov            9,068      0.8%   10,868     3.8%      3.8%     -3.0%   $   2.02   190.6     $   1.06    17.7%      -0.17
2004 Dec            9,130      1.2%   10,899     3.8%      3.8%     -2.5%   $   2.02   190.7     $   1.06    23.0%      -0.11
2005 January        9,021      1.6%   10,931     3.7%      3.7%     -2.1%   $   1.95   190.7     $   1.02    19.2%      -0.11
2005 Feb            8,930      1.4%   10,965     3.7%      3.7%     -2.3%   $   1.92   190.9     $   1.00    14.2%      -0.16
2005 March          8,856      0.8%   10,998     3.7%      3.7%     -2.8%   $   1.98   191.9     $   1.03    11.6%      -0.24
2005 April          8,974      0.7%   11,029     3.6%      3.6%     -2.9%   $   2.13   193.2     $   1.10    14.7%      -0.20
2005 May            9,128      0.8%   11,059     3.6%      3.6%     -2.8%   $   2.23   194.1     $   1.15    13.1%      -0.22
2005 June           9,256      1.0%   11,092     3.6%      3.6%     -2.6%   $   2.27   194.5     $   1.17     9.9%      -0.26
2005 July           9,363      1.6%   11,127     3.6%      3.6%     -2.1%   $   2.28   194.8     $   1.17     8.6%      -0.24
2005 August         9,428      1.4%   11,165     3.6%      3.6%     -2.3%   $   2.37   195.4     $   1.21    14.9%      -0.15
2005 Sept           9,267      0.4%   11,195     3.6%      3.6%     -3.2%   $   2.62   196.9     $   1.33    29.4%      -0.11
2005 Oct            9,121     -0.7%   11,218     3.5%      3.5%     -4.2%   $   2.78   198.1     $   1.40    34.6%      -0.12
2005 Nov            8,996     -0.8%   11,233     3.4%      3.4%     -4.1%   $   2.73   198.5     $   1.37    29.7%      -0.14
2005 Dec            9,112     -0.2%   11,259     3.3%      3.3%     -3.5%   $   2.48   197.9     $   1.25    18.6%      -0.19
2006 Jan            9,017      0.0%   11,297     3.3%      3.3%     -3.4%   $   2.33   197.6     $   1.18    15.2%      -0.22
2006 Feb            8,936      0.1%   11,346     3.5%      3.5%     -3.4%   $   2.31   197.9     $   1.17    16.4%      -0.21
2006 Mar            8,897      0.5%   11,395     3.6%      3.6%     -3.1%   $   2.39   198.9     $   1.20    16.4%      -0.19
2006 Apr            9,035      0.7%   11,444     3.8%      3.8%     -3.1%   $   2.53   200.0     $   1.27    14.9%      -0.21
2006 May            9,200      0.8%   11,493     3.9%      3.9%     -3.1%   $   2.75   201.3     $   1.36    18.8%      -0.17
Some averages:

All months shown (04-April to 06-May):       -0.20
Most recent 12 months (05-June to 06-May):   -0.18
Gasoline Price-Elasticity
A spreadsheet by Charles Komanoff
Telephone: (212) 260 5237 / Email: kea@igc.org / Website: www.komanoff.net
Latest edition:   28-Jun-06
2-yr Price Elasticity
This worksheet calculates the price-elasticity of gasoline demand on a 2-yr basis, i.e., by comparing monthly usage
against usage 24 months earlier.
                                                             Expected    Actual       Avg     Inflation  Inflation- Incrs in
                       Motor Incrs in       GDP,    Incrs in increase   incrs in      U.S.       index   adjusted infl-adj'd
                    Gasoline Product annual            GDP      in gas gas use,      Retail    used to    average gas price
                     Product Supplied     rate in    from 2       use,    minus      Motor      adjust    gasoline   from 2
                    Supplied from 2 yr billions       years based on expected         Gas          gas price (1982-   years
                 (1000 bbl/d)   earlier of 2000$     earlier      GDP      incrs     Price      prices 84 = 100)     earlier

2003 January          8,414               10,124                                    $1.557      181.7       $0.86
2003 Feb              8,525               10,139                                    $1.686      183.1       $0.92
2003 March            8,602               10,169                                    $1.791      184.2       $0.97
2003 April            8,838               10,200                                    $1.704      183.8       $0.93
2003 May              9,042               10,230                                    $1.587      183.5       $0.86
2003 June             9,170               10,291                                    $1.558      183.7       $0.85
2003 July             9,192               10,351                                    $1.567      183.9       $0.85
2003 August           9,411               10,411                                    $1.671      184.6       $0.91
2003 Sept             8,926               10,441                                    $1.771      185.2       $0.96
2003 October          9,108               10,472                                    $1.646      185.0       $0.89
2003 Nov              8,946               10,503                                    $1.578      184.5       $0.86
2003 Dec              9,011               10,539                                    $1.538      184.3       $0.83
2004 January          8,680               10,576                                    $1.635      185.2       $0.88
2004 Feb              8,743               10,613                                    $1.715      186.2       $0.92
2004 March            8,922               10,643                                    $1.809      187.4       $0.97
2004 April            9,067               10,674                                    $1.875      188.0       $1.00
2004 May              9,178               10,704                                    $2.050      189.1       $1.08
2004 June             9,237               10,739                                    $2.083      189.7       $1.10
2004 July             9,243               10,774                                    $1.982      189.4       $1.05
2004 August           9,424               10,809                                    $1.941      189.5       $1.02
2004 Sept             9,030               10,838                                    $1.934      189.9       $1.02
2004 October          9,103               10,868                                    $2.072      190.9       $1.09
2004 Nov              9,070               10,897                                    $2.053      191.0       $1.07
2004 Dec              9,219               10,931                                    $1.926      190.3       $1.01
2005 January          8,775       4.3%    10,965      8.3%       8.3%       -4.0%   $1.866      190.7       $0.98      14.2%
2005 Feb              8,798       3.2%    10,999      8.5%       8.5%       -5.3%   $1.960      191.8       $1.02      11.0%
2005 March            8,996       4.6%    11,029      8.5%       8.5%       -3.9%   $2.107      193.3       $1.09      12.1%
2005 April            9,130       3.3%    11,059      8.4%       8.4%       -5.1%   $2.325      194.6       $1.19      28.9%
2005 May              9,257       2.4%    11,089      8.4%       8.4%       -6.0%   $2.257      194.4       $1.16      34.2%
2005 June             9,380       2.3%    11,127      8.1%       8.1%       -5.8%   $2.218      194.5       $1.14      34.5%
2005 July             9,451       2.8%    11,165      7.9%       7.9%       -5.0%   $2.357      195.4       $1.21      41.6%
2005 August           9,454       0.5%    11,202      7.6%       7.6%       -7.1%   $2.541      196.4       $1.29      42.9%
2005 Sept             8,897      -0.3%    11,218      7.4%       7.4%       -7.8%   $2.969      198.8       $1.49      56.2%
2005 October          9,013      -1.0%    11,233      7.3%       7.3%       -8.3%   $2.830      199.2       $1.42      59.7%
2005 Nov              9,079       1.5%    11,248      7.1%       7.1%       -5.6%   $2.387      197.6       $1.21      41.2%
2005 Dec              9,246       2.6%    11,297      7.2%       7.2%       -4.6%   $2.230      196.8       $1.13      35.8%
2006 Jan              8,727       0.5%    11,346      7.3%       7.3%       -6.7%   $2.359      198.3       $1.19      34.7%
2006 Feb              8,836       1.1%    11,395      7.4%       7.4%       -6.3%   $2.354      198.7       $1.18      28.6%
2006 Mar              9,129       2.3%    11,444      7.5%       7.5%       -5.2%   $2.444      199.8       $1.22      26.7%
2006 Apr              9,140       0.8%    11,493      7.7%       7.7%       -6.9%   $2.801      201.5       $1.39      39.4%
2006 May              9,330       1.7%    11,542      7.8%       7.8%       -6.2%   $2.993      202.5       $1.48      36.3%
Average 2-yr price elasticities for the months available:    # of data points:          17              Mean 2-yr elasticity:
Assumed income-elasticity of gasoline demand   1.00
  2-yr Gas
     Price-
 elasticity
calculated
   for this
    month




     -0.28
     -0.48
     -0.32
     -0.18
     -0.18
     -0.17
     -0.12
     -0.17
     -0.14
     -0.14
     -0.14
     -0.13
     -0.19
     -0.22
     -0.19
     -0.17
     -0.17
     -0.20
Gasoline Price-Elasticity
A spreadsheet by Charles Komanoff
Telephone: (212) 260 5237 / Email: kea@igc.org / Website: www.komanoff.net
Latest edition:  28-Jun-06
Full Years
This worksheet calculates the price-elasticity of gasoline using full years of data, rather than the monthly usage
data in the other worksheets.
It shows: (1) Year-on-year (short-term) price-elasticities avg'd over the past six years are -0.16; (2) the very long (15-yr) price-
elasticity is -1.06, provided the income (GDP) elasticity is assumed to be one; and it's equal to -0.41, if the income-elasticity is
assumed to be 2/3.
                                                                        Actual           Avg     Inflation  Inflation-
                        Motor Incrs in      GDP,            Expected   incrs in          U.S.       index   adjusted     Incrs in
                     Gasoline Product annual       Incrs in  incrs in gas use,          Retail    used to    average infl-adj'd
                      Product Supplied    rate in     GDP    gas use     minus          Motor      adjust    gasoline gas price
                     Supplied  from yr billions from year based on expected              Gas          gas price (1982- from year
                  (1000 bbl/d)  earlier of 2000$    earlier     GDP       incrs         Price      prices 84 = 100)       earlier

1990                   7,235                 7,113                                     $1.217      130.7       $0.93
1991                   7,188       -0.7%     7,101      -0.2%       -0.2%      -0.5%   $1.196      136.2       $0.88       -5.7%
1992                   7,268        1.1%     7,337       3.3%        3.3%      -2.2%   $1.190      140.3       $0.85       -3.4%
1993                   7,476        2.9%     7,533       2.7%        2.7%       0.2%   $1.173      144.5       $0.81       -4.3%
1994                   7,601        1.7%     7,836       4.0%        4.0%      -2.3%   $1.174      148.2       $0.79       -2.4%
1995                   7,789        2.5%     8,032       2.5%        2.5%       0.0%   $1.205      152.4       $0.79       -0.2%
1996                   7,891        1.3%     8,329       3.7%        3.7%      -2.4%   $1.288      156.9       $0.82        3.8%
1997                   8,017        1.6%     8,704       4.5%        4.5%      -2.9%   $1.291      160.5       $0.80       -2.0%
1998                   8,253        3.0%     9,067       4.2%        4.2%      -1.2%   $1.115      163.0       $0.68      -15.0%
1999                   8,431        2.1%     9,470       4.4%        4.4%      -2.3%   $1.221      166.6       $0.73        7.1%
2000                   8,472        0.5%     9,817       3.7%        3.7%      -3.2%   $1.563      172.2       $0.91       23.8%
2001                   8,610        1.6%     9,891       0.8%        0.8%       0.9%   $1.531      177.1       $0.86       -4.8%
2002                   8,848        2.8%    10,049       1.6%        1.6%       1.2%   $1.441      179.9       $0.80       -7.3%
2003                   8,935        1.0%    10,321       2.7%        2.7%      -1.7%   $1.638      184.0       $0.89       11.1%
2004                   9,105        1.9%    10,756       4.2%        4.2%      -2.3%   $1.923      188.9       $1.02       14.4%
2005                   9,125        0.2%    11,135       3.5%        3.5%      -3.3%   $2.338      195.3       $1.20       17.6%
Average yr-on-yr price elasticities for yrs shown in bold:      # of data points:           6              Mean full-yr elasticity:
Price elasticity from 1990 to 2005, if income elasticity is assume to equal 1 (one)
(15-year comparisons)            26.1%                 56.6%     56.6%    -30.4%                                           28.6%
Price elasticity from 1990 to 2005, if income elasticity is assume to equal 2/3
(15-year comparisons)            26.1%                 56.6%     37.7%    -11.6%                                           28.6%
Assumed income-elasticity of gasoline demand                                                                     1.00
 ong (15-yr) price-
ncome-elasticity is

                  1-yr Gas
                     Price-
                 elasticity
                calculated
                   for this
                       year



                       0.09
                       0.65
                      -0.05
                       0.97
                       0.21
                      -0.63
                       1.44
                       0.08
                      -0.32
                      -0.13
                      -0.18
                      -0.16
                      -0.15
                      -0.16
                      -0.19
                      -0.16


                      -1.06

                      -0.41
Gasoline Price-Elasticity
A spreadsheet by Charles Komanoff
Telephone: (212) 260 5237 / Email: kea@igc.org / Website: www.komanoff.net
Latest edition:  28-Jun-06

This worksheet tabulates GDP data used to derive price-elasticities in the preceding worksheets.

               Current-Dollar and "Real" Gross Domestic Product
                        (Seasonally adjusted annual rates)

Downloaded from http://www.bea.gov/bea/dn/gdplev.xls.

                 Annual                                          Quarterly

                               GDP in
                 GDP in       billions of                         GDP in         GDP in
                billions of    chained                           billions of    billions of
                 current         2000                             current        chained
                 dollars       dollars                            dollars      2000 dollars

        1929          103.6         865.2              1947q1          237.2        1,570.5
        1930           91.2         790.7              1947q2          240.5        1,568.7
        1931           76.5         739.9              1947q3          244.6        1,568.0
        1932           58.7         643.7              1947q4          254.4        1,590.9
        1933           56.4         635.5              1948q1          260.4        1,616.1
        1934           66.0         704.2              1948q2          267.3        1,644.6
        1935           73.3         766.9              1948q3          273.9        1,654.1
        1936           83.8         866.6              1948q4          275.2        1,658.0
        1937           91.9         911.1              1949q1          270.0        1,633.2
        1938           86.1         879.7              1949q2          266.2        1,628.4
        1939           92.2         950.7              1949q3          267.7        1,646.7
        1940          101.4       1,034.1              1949q4          265.2        1,629.9
        1941          126.7       1,211.1              1950q1          275.2        1,696.8
        1942          161.9       1,435.4              1950q2          284.6        1,747.3
        1943          198.6       1,670.9              1950q3          302.0        1,815.8
        1944          219.8       1,806.5              1950q4          313.4        1,848.9
        1945          223.1       1,786.3              1951q1          329.0        1,871.3
        1946          222.3       1,589.4              1951q2          336.7        1,903.1
        1947          244.2       1,574.5              1951q3          343.6        1,941.1
        1948          269.2       1,643.2              1951q4          348.0        1,944.4
        1949          267.3       1,634.6              1952q1          351.3        1,964.7
        1950          293.8       1,777.3              1952q2          352.2        1,966.0
        1951          339.3       1,915.0              1952q3          358.5        1,978.8
        1952          358.3       1,988.3              1952q4          371.4        2,043.8
        1953          379.4       2,079.5              1953q1          378.4        2,082.3
        1954          380.4       2,065.4              1953q2          382.0        2,098.1
        1955          414.8       2,212.8              1953q3          381.1        2,085.4
        1956          437.5       2,255.8              1953q4          375.9        2,052.5
        1957          461.1       2,301.1              1954q1          375.3        2,042.4
        1958          467.2       2,279.2              1954q2          376.0        2,044.3
        1959          506.6       2,441.3              1954q3          380.8        2,066.9
        1960          526.4       2,501.8              1954q4          389.5        2,107.8
        1961          544.7       2,560.0              1955q1          402.6        2,168.5
        1962          585.6       2,715.2              1955q2          410.9        2,204.0
        1963          617.7       2,834.0              1955q3          419.5        2,233.4
        1964          663.6       2,998.6              1955q4          426.0        2,245.3
        1965          719.1       3,191.1              1956q1          428.3        2,234.8
1966      787.8    3,399.1   1956q2     434.2   2,252.5
1967      832.6    3,484.6   1956q3     439.3   2,249.8
1968      910.0    3,652.7   1956q4     448.1   2,286.5
1969      984.6    3,765.4   1957q1     457.2   2,300.3
1970    1,038.5    3,771.9   1957q2     459.2   2,294.6
1971    1,127.1    3,898.6   1957q3     466.4   2,317.0
1972    1,238.3    4,105.0   1957q4     461.5   2,292.5
1973    1,382.7    4,341.5   1958q1     454.0   2,230.2
1974    1,500.0    4,319.6   1958q2     458.1   2,243.4
1975    1,638.3    4,311.2   1958q3     471.7   2,295.2
1976    1,825.3    4,540.9   1958q4     485.0   2,348.0
1977    2,030.9    4,750.5   1959q1     495.4   2,392.9
1978    2,294.7    5,015.0   1959q2     508.4   2,455.8
1979    2,563.3    5,173.4   1959q3     509.3   2,453.9
1980    2,789.5    5,161.7   1959q4     513.2   2,462.6
1981    3,128.4    5,291.7   1960q1     526.9   2,517.4
1982    3,255.0    5,189.3   1960q2     526.1   2,504.8
1983    3,536.7    5,423.8   1960q3     528.9   2,508.7
1984    3,933.2    5,813.6   1960q4     523.6   2,476.2
1985    4,220.3    6,053.7   1961q1     527.9   2,491.2
1986    4,462.8    6,263.6   1961q2     539.0   2,538.0
1987    4,739.5    6,475.1   1961q3     549.4   2,579.1
1988    5,103.8    6,742.7   1961q4     562.5   2,631.8
1989    5,484.4    6,981.4   1962q1     576.0   2,679.1
1990    5,803.1    7,112.5   1962q2     583.2   2,708.4
1991    5,995.9    7,100.5   1962q3     590.0   2,733.3
1992    6,337.7    7,336.6   1962q4     593.3   2,740.0
1993    6,657.4    7,532.7   1963q1     602.4   2,775.9
1994    7,072.2    7,835.5   1963q2     611.2   2,810.6
1995    7,397.7    8,031.7   1963q3     623.9   2,863.5
1996    7,816.9    8,328.9   1963q4     633.5   2,885.8
1997    8,304.3    8,703.5   1964q1     649.6   2,950.5
1998    8,747.0    9,066.9   1964q2     658.8   2,984.8
1999    9,268.4    9,470.3   1964q3     670.5   3,025.5
2000    9,817.0    9,817.0   1964q4     675.6   3,033.6
2001   10,128.0    9,890.7   1965q1     695.7   3,108.2
2002   10,469.6   10,048.8   1965q2     708.1   3,150.2
2003   10,971.2   10,320.6   1965q3     725.2   3,214.1
2004   11,734.3   10,755.7   1965q4     747.5   3,291.8
2005   12,487.1   11,134.8   1966q1     770.8   3,372.3
                             1966q2     779.9   3,384.0
                             1966q3     793.4   3,406.3
                             1966q4     807.1   3,433.7
                             1967q1     817.9   3,464.1
                             1967q2     822.5   3,464.3
                             1967q3     837.1   3,491.8
                             1967q4     852.8   3,518.2
                             1968q1     879.9   3,590.7
                             1968q2     904.2   3,651.6
                             1968q3     919.4   3,676.5
                             1968q4     936.3   3,692.0
                             1969q1     961.0   3,750.2
                             1969q2     976.3   3,760.9
                             1969q3     996.5   3,784.2
                             1969q4   1,004.6   3,766.3
                             1970q1   1,017.3   3,760.0
                             1970q2   1,033.2   3,767.1
1970q3   1,050.7   3,800.5
1970q4   1,052.9   3,759.8
1971q1   1,098.3   3,864.1
1971q2   1,119.1   3,885.9
1971q3   1,139.3   3,916.7
1971q4   1,151.7   3,927.9
1972q1   1,190.6   3,997.7
1972q2   1,225.9   4,092.1
1972q3   1,249.7   4,131.1
1972q4   1,287.0   4,198.7
1973q1   1,335.5   4,305.3
1973q2   1,371.9   4,355.1
1973q3   1,391.2   4,331.9
1973q4   1,432.3   4,373.3
1974q1   1,447.0   4,335.4
1974q2   1,485.3   4,347.9
1974q3   1,514.2   4,305.8
1974q4   1,553.4   4,288.9
1975q1   1,570.0   4,237.6
1975q2   1,605.6   4,268.6
1975q3   1,663.1   4,340.9
1975q4   1,714.6   4,397.8
1976q1   1,772.6   4,496.8
1976q2   1,804.9   4,530.3
1976q3   1,838.3   4,552.0
1976q4   1,885.3   4,584.6
1977q1   1,939.3   4,640.0
1977q2   2,006.0   4,731.1
1977q3   2,066.8   4,815.8
1977q4   2,111.6   4,815.3
1978q1   2,150.0   4,830.8
1978q2   2,275.6   5,021.2
1978q3   2,336.2   5,070.7
1978q4   2,417.0   5,137.4
1979q1   2,464.4   5,147.4
1979q2   2,527.6   5,152.3
1979q3   2,600.7   5,189.4
1979q4   2,660.5   5,204.7
1980q1   2,725.3   5,221.3
1980q2   2,729.3   5,115.9
1980q3   2,786.6   5,107.4
1980q4   2,916.9   5,202.1
1981q1   3,052.7   5,307.5
1981q2   3,085.9   5,266.1
1981q3   3,178.7   5,329.8
1981q4   3,196.4   5,263.4
1982q1   3,186.8   5,177.1
1982q2   3,242.7   5,204.9
1982q3   3,276.2   5,185.2
1982q4   3,314.4   5,189.8
1983q1   3,382.9   5,253.8
1983q2   3,484.1   5,372.3
1983q3   3,589.3   5,478.4
1983q4   3,690.4   5,590.5
1984q1   3,809.6   5,699.8
1984q2   3,908.6   5,797.9
1984q3   3,978.2   5,854.3
1984q4   4,036.3   5,902.4
1985q1   4,119.5   5,956.9
1985q2   4,178.4   6,007.8
1985q3   4,261.3   6,101.7
1985q4   4,321.8   6,148.6
1986q1   4,385.6   6,207.4
1986q2   4,425.7   6,232.0
1986q3   4,493.9   6,291.7
1986q4   4,546.1   6,323.4
1987q1   4,613.8   6,365.0
1987q2   4,690.0   6,435.0
1987q3   4,767.8   6,493.4
1987q4   4,886.3   6,606.8
1988q1   4,951.9   6,639.1
1988q2   5,062.8   6,723.5
1988q3   5,146.6   6,759.4
1988q4   5,253.7   6,848.6
1989q1   5,367.1   6,918.1
1989q2   5,454.1   6,963.5
1989q3   5,531.9   7,013.1
1989q4   5,584.3   7,030.9
1990q1   5,716.4   7,112.1
1990q2   5,797.7   7,130.3
1990q3   5,849.4   7,130.8
1990q4   5,848.8   7,076.9
1991q1   5,888.0   7,040.8
1991q2   5,964.3   7,086.5
1991q3   6,035.6   7,120.7
1991q4   6,095.8   7,154.1
1992q1   6,196.1   7,228.2
1992q2   6,290.1   7,297.9
1992q3   6,380.5   7,369.5
1992q4   6,484.3   7,450.7
1993q1   6,542.7   7,459.7
1993q2   6,612.1   7,497.5
1993q3   6,674.6   7,536.0
1993q4   6,800.2   7,637.4
1994q1   6,911.0   7,715.1
1994q2   7,030.6   7,815.7
1994q3   7,115.1   7,859.5
1994q4   7,232.2   7,951.6
1995q1   7,298.3   7,973.7
1995q2   7,337.7   7,988.0
1995q3   7,432.1   8,053.1
1995q4   7,522.5   8,112.0
1996q1   7,624.1   8,169.2
1996q2   7,776.6   8,303.1
1996q3   7,866.2   8,372.7
1996q4   8,000.4   8,470.6
1997q1   8,113.8   8,536.1
1997q2   8,250.4   8,665.8
1997q3   8,381.9   8,773.7
1997q4   8,471.2   8,838.4
1998q1   8,586.7   8,936.2
1998q2   8,657.9   8,995.3
1998q3   8,789.5   9,098.9
1998q4   8,953.8   9,237.1
1999q1    9,066.6    9,315.5
1999q2    9,174.1    9,392.6
1999q3    9,313.5    9,502.2
1999q4    9,519.5    9,671.1
2000q1    9,629.4    9,695.6
2000q2    9,822.8    9,847.9
2000q3    9,862.1    9,836.6
2000q4    9,953.6    9,887.7
2001q1   10,021.5    9,875.6
2001q2   10,128.9    9,905.9
2001q3   10,135.1    9,871.1
2001q4   10,226.3    9,910.0
2002q1   10,333.3    9,977.3
2002q2   10,426.6   10,031.6
2002q3   10,527.4   10,090.7
2002q4   10,591.1   10,095.8
2003q1   10,717.0   10,138.6
2003q2   10,844.6   10,230.4
2003q3   11,087.4   10,410.9
2003q4   11,236.0   10,502.6
2004q1   11,457.1   10,612.5
2004q2   11,666.1   10,704.1
2004q3   11,818.8   10,808.9
2004q4   11,995.2   10,897.1
2005q1   12,198.8   10,999.3
2005q2   12,378.0   11,089.2
2005q3   12,605.7   11,202.3
2005q4   12,766.1   11,248.3
2006q1   13,037.4   11,394.7

								
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