Public Transit Up, Driving Down as Gas Prices Increase

Proving that basic economic concepts like elasticity of demand and substitution of goods are not outmoded, the American public is responding to increases in gas prices by driving less and taking public transit more.

Soaring gas prices are pushing more Americans to take public transit, with streetcars, trolleys and other light rail experiencing a 10.3 percent increase in ridership for the first quarter of the year, according to a report released yesterday by the American Public Transportation Association. Americans took 2.6 billion trips on all modes of public transportation, including subways and buses, in the first three months of 2008, a 3.3 percent increase, or almost 85 million more trips than in the same period last year, the report said.

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The U.S. Transportation Department reported last month that in March, Americans drove 11 billion fewer miles than in March 2007, a decline of 4.3 percent and the first time since 1979 that traffic has dropped from one March to the next.

Next: A government study showing that sales of umbrellas increase during rainy season.

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James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. Dave Schuler says:

    It also calls into question the long-held belief that the demand for gasoline was relatively inelastic with respect to price.

  2. James Joyner says:

    It also calls into question the long-held belief that the demand for gasoline was relatively inelastic with respect to price.

    True, although a 4.3 percent decrease in demand in response to something like a 33 percent increase in price isn’t exactly massive elasticity.

  3. Bithead says:

    True, although a 4.3 percent decrease in demand in response to something like a 33 percent increase in price isn’t exactly massive elasticity.

    Correct.

    Or better, consider it from the stand point of the $2.00/gallon we were getting when the Democrat Party took over Congress. Since the Democrat party took over Congress, Gas prices have doubled, and the overall drop in consumption to my memory, is only slightly larger than your 33% price increase figure suggests.

    The bottom line is there wasn’t a whole bunch of ‘give’ to be had on the demand side, particularly in the short term, if ever. We are already so far into diminishing returns, as to make the point moot.

    But as I mentioned yesterday, the price/bbl numbers have started back down, very near to the time I predicted they would. Which, of course changes the entire dynamic.

  4. M1EK says:

    You would think this was obvious, but every time a transit project is proposed in most cities in this country, the assertion that Americans simply won’t take transit is paraded front and center (and generally unchallenged).

    (nobody ever asks the obvious question: “at what price”).

  5. G.A.Phillips says:

    If only my car ran on donkey pooh,or do they make saddles for caribou?

    feel free to and to my poem, maybe we can win a contest.

  6. od says:

    Elasticity isn’t necessarily instantaneous. Consistent higher gas prices will almost certainly lead to alternatives (both in terms of efficiency and energy supply), as it makes them cost effective. Europe is an example of this – the high energy prices (mainly due to taxes) has lead to a different strategy on the part of consumers than what has occurred in North America.

    It will also cause people to rethink politically neglected avenues such as nuclear power.

  7. Gollum says:

    The bottom line is there wasn’t a whole bunch of ‘give’ to be had on the demand side, particularly in the short term, if ever. We are already so far into diminishing returns, as to make the point moot.

    Bit, I always understood diminishing returns to be a production law – – i.e. if $1 of resources produces one ton of grain there is a point at which $1 of additional resources will produce less than one ton of additional grain.

    Applied on the demand side it doesn’t make sense. The “give” you suggest in gasoline consumption doesn’t come rapidly (as od points out) – – it takes people time to buy new cars, move closer to work, coordinate carpools. In a volatile market, people will wait even longer to begin to do those things because they will think the price might be about to come back down (as you suggest). No one is going to run out and buy a new fuel efficient car when the price goes up $.01, but if the price rises $5 per gallon, the increased efficiency would be worth it, and if the price rose $10 per gallon trading up would be even more worth it. In that sense, an increasing price increases the “returns” on the “give” – exactly backwards from what you suggest. Unless of course I mistook your point.

  8. Bithead says:

    Applied on the demand side it doesn’t make sense. The “give” you suggest in gasoline consumption doesn’t come rapidly (as od points out) – – it takes people time to buy new cars, move closer to work, coordinate carpools. In a volatile market, people will wait even longer to begin to do those things because they will think the price might be about to come back down (as you suggest). No one is going to run out and buy a new fuel efficient car when the price goes up $.01, but if the price rises $5 per gallon, the increased efficiency would be worth it, and if the price rose $10 per gallon trading up would be even more worth it. In that sense, an increasing price increases the “returns” on the “give” – exactly backwards from what you suggest. Unless of course I mistook your point.

    Well you have to some degree. I’m speaking to effort invested, and money, vs the returns had in smaller energy and money demand.

    The effect of price increases vs efficiencies gains is a less than exact science, of course, but in my view we’re already well past the stage where compartively large decreases in oil consumed is a reasonable thing to obtain.

    (And yes, I know “reasonable” is likely the most maliable word in the English language)

    That situation, (and thereby our definition or ‘reasobable’) will undoubtly change.. up and down… as technology improves. Over time, I suppose our ability to get more efficiency will improve. Then too will our ability to find and produce oil product improve, so we’ll be under less pressure to bring that consumption down, and the two tend to balacne each other.

    But without the technology imprvements… which alas!, in both cases, will not come with governmental ivolvement, but a removal of it… we remain where we are…

    But again, all this assumes that having people not able to use energy, or having it’s use limited by government, is a good thing. Which, of course is sheer nonsense.