If there was any delusion that somehow more expensive gasoline and petroleum related products prices would somehow cause a nation-wide drop in their usage, think again. It seems as though the demand for Gas is inelastic currently, as the increase in price has not decreased the demand at all.
Our friends at Stats Canada say that Gasoline consumption year over year from April 2006 to April 2007 for Unleaded Gasoline is up 2.9% and diesel fuel usage is up a whopping 8.2%. Now on the positive side, higher “grade” unleaded gas consumption has dropped a great deal, so folks may be forced to buy it, but they don’t seem to want to pay extra for “higher grade” gasoline, right now at least.
| Sales of refined petroleum products | |||
|---|---|---|---|
| April 2006 | April 2007 | April 2006 to April 2007 | |
| thousands of cubic metres | % change | ||
| Total, all products | 7,449.5 | 7,743.3 | 3.9 |
| Motor gasoline | 3,202.0 | 3,266.2 | 2.0 |
| Diesel fuel oil | 1,821.4 | 1,970.7 | 8.2 |
| Light fuel oil | 299.2 | 376.3 | 25.8 |
| Heavy fuel oil | 470.6 | 602.0 | 27.9 |
| Aviation turbo fuels | 506.2 | 453.7 | -10.4 |
| Petrochemical feedstocks | 392.1 | 387.1 | -1.3 |
| All other refined products | 758.0 | 687.3 | -9.3 |
Interestingly aviation fuel usage has dropped, maybe the folks in the Airlines are figuring out ways to squeeze more folks onto fewer planes?
I think the whole point is a non-question, since most people will pay whatever it costs, until there is an alternative that fits the economics, and that means the price is completely Inelastic (it could go up to $20/liter and it will get bought).
–C8j
How high do prices need to go before consumption drops? How much will you pay? Check out the Gas Price Calculator at http://www.afres.org where you enter your typical trip, information about your car, your transit alternative, and what you value your time at. Most people will pay 8 times current prices…