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How Full Is the tank? – Insights on Short-run Fuel Price Reactions from German Travel Diary Data

Nolan Ritter, Christoph Schmidt and Colin Vance

No 401, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: We provide evidence that motorists respond to short-run fluctuations in fuel prices at the gas pump and not on the road. Employing variants of censored panel regression to control for unobserved heterogeneity and censoring of the dependent variable, we find that the fuel price has a large and negative impact on the quantity of fuel purchased, but no significant impact on the subsequent distance driven per day until the next refill. Over the short-run, drivers thus appear to cope with high fuel prices by adjusting fuel purchases with each visit to the filling station, but without altering their daily mileage.

Keywords: panel data; households; driving behavior; tanking behavior; fuel price (search for similar items in EconPapers)
JEL-codes: C33 Q41 R41 (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:401

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