Publication Detail

Gasoline Price Volatility and the Elasticity of Demand for Gasoline

UCD-ITS-RP-13-34

Reprint

Sustainable Transportation Energy Pathways (STEPS)

Suggested Citation:
Lin Lawell, C.-Y. Cynthia and Lea Prince (2013) Gasoline Price Volatility and the Elasticity of Demand for Gasoline. Energy Economics 38, 111 - 117

We examine how gasoline price volatility impacts consumers' price elasticity of demand for gasoline. Results show that volatility in prices decreases consumer demand for gasoline in the intermediate run. We also find that consumers appear to be less elastic in response to changes in gasoline price when gasoline price volatility is medium or high, compared to when it is low. Moreover, we find that when we control for variance in our econometric model, gasoline price elasticity of demand is lower in magnitude in the long run.

Keywords: gasoline demand elasticity; gasoline price volatility