Falling Gasoline Prices Have Little Effect on Car Travel, Analysis Shows

Although the average retail price of gasoline in the U.S. has fallen 28 percent from its peak in June 2014,

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Gas prices vs. miles driven
the decline may not have much effect on automobile travel and gasoline consumption, according to an analysis by the U.S. Energy Information Administration (E.I.A.). Typically, an increase in the price of a product leads to lower demand, and vice versa — a concept known as price elasticity. Air travel, for example, tends to be highly elastic: A 10-percent increase in the price of air fares leads to an even greater decrease in air travel. Automobile travel tends to be much less elastic, however. According to E.I.A. data, it takes a 25- to 50-percent decrease in the price of gasoline to increase automobile travel by just 1 percent. One reason for this is that the distance people drive to work and for daily errands is relatively fixed, analysts say. Increased vehicle fuel economy also balances out increases in miles traveled, leading to more stability in gasoline consumption.