With and without the tracks: how railroad access impacts gas price elasticity

ABSTRACT

Since 2011, gas prices have fallen 43%, raising the question of how different communities adjust their vehicle miles travelled. Data from the National Household Travel Survey’s EPA fuel economy database and the Energy Information Administration database are used to measure consumers’ elasticity to changes in gas prices. We find no significant difference between the price elasticity of individuals in cities with rail access and those without. Furthermore, we are able to rule out an elasticity in those with rail that is greater than 0.61, suggesting that rail access does not make consumer demand elastic.

KEYWORDS:

• Gas prices
• vehicle miles
• rail

JEL CLASSIFICATION:

• D12
• L71
• Q35
• R41

Acknowledgements

The authors thank Dietrich Earnhart, Donna Ginther, Tsvetan Tsvetanov, and Brian Staihr for their comments and suggestions. Partial funding for this project was from the Department of Economics at the University of Kansas. The authors have no other financial interest or benefit to disclose.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ MSA identifiers are not unavailable in the dataset so we could not include a MSA fixed effect. Still, we believe that the included controls (e.g. state fixed effects) are sufficient to control for unobserved heterogeneity.

² −0.316 – 1.96 * −0.149 = −0.61.

Additional information

Funding

This work was supported partially by the Department of Economics at the University of Kansas.