How (in)elastic is your demand for gasoline?

Ok, we know that rising prices tend to cause people to buy less--the question is: how much less? Consider gasoline. We've all seen the rising (nominal) price of gasoline at the pumps over the last year or so. If the demand for gasoline slopes downward, then we should be curtailing our consumption of gasoline. Have any of you cut back on your purchases of gasoline? Have you taken fewer trips to the grocery? Are you carpooling more frequently? Have you shifted over to a more fuel efficient car? If you haven't cut back, perhaps it's because the real price of gasoline hasn't changed much over the last few years. In fact, the real (inflation-adjusted) price of gasoline has fluctuated between a narrow range over the last 20 years or so.




Most econometric studies of gasoline demand put the short run price elasticity somewhere in the range of -0.40 to -0.6, making it inelastic. Longer run estimates result in higher elasticities, suggesting that consumers are more price sensitive if given enough time to react and conserve.