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How effective are policies to reduce gasoline consumption? Evaluating a set of measures in Spain

Javier Asensio (), Andres Gomez-Lobo and Anna Matas

Energy Economics, 2014, vol. 42, issue C, 34-42

Abstract: Using a panel of 48 provinces for four years we empirically analyze a series of temporary and permanent policies aimed at curbing fuel consumption implemented in Spain between March and June 2011. The first policy was a reduction in the speed limit in highways. The second policy was an increase in the biofuel content of fuels used in the transport sector. The third measure was a decrease of 5% in commuting and regional train fares that resulted in two major metropolitan areas reducing their overall fare for public transit. The results indicate that the speed limit reduction in highways lowered gasoline consumption by 2% to 3%, while an increase in the biofuel content of gasoline increased this consumption. This last result is consistent with experimental evidence that indicates that mileage per liter falls with an increase in the biofuel content in gasolines. As for the reduction in transit fares, we do not find a significant effect for this policy. However, in specifications including the urban transit fare for the major cities in each province the estimated cross-price elasticity of the demand for gasoline – used as a proxy for car use – with respect to the price of transit is within the range reported in the literature. This is important since one of the main efficiency justifications for subsidizing public transit rests on the positive value of this parameter and most of the estimates reported in the literature are quite dated.

Keywords: Fuel consumption; Cross-elasticities; Transport policies; Biofuel; Speed limit reduction (search for similar items in EconPapers)
JEL-codes: Q48 R41 R48 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:42:y:2014:i:c:p:34-42

DOI: 10.1016/j.eneco.2013.11.011

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