True. But that isn’t the salient point of the graph. The salient point is that gasoline increasing from ~$2 to ~$3 didn’t reduce demand, and increasing from ~$3 to ~$3.45 didn’t reduce demand, and EVEN knowing that gasoline increased from ~$2 to ~$3.45, they didn’t predict any decrease in use of the commodity. The only reductions that appear in their charts are seasonal and the initial pandemic drop.
Well, because they didn’t predict that gasoline would increase from ~$2 to ~$3. Their chart showed average 2021 prices at $3.00 per gallon, and projected average 2022 prices at $3.06 per gallon and $2.80 per gallon. It’s hardly a surprise they would show demand as relatively flat, given that they were projecting that annual gas prices would be flat as well (and real prices probably falling slightly).
As for this:
1. I don’t think $4+ will do much at all. I think we would need to get to near European prices to see any meaningful effect. Probably beginning at $5.50 or $6 we would see people make meaningful change.
It depends on how you define ‘meaningful.’ Fleetwide new car fuel economy spiked in the mid 2000’s in response to higher gas prices caused by that decade’s commodity boom. From 1985 to 2005, the average real world fuel economy of new cars had been steadily declining from 22 to 20 mpg. Not because individual vehicles were getting less efficient, but because the composition of the fleet changed as consumers switched massively from sedans/coupes to SUV’s. But as soon as gas prices started rising again in 2005, fuel economy reversed as well - rising sharply from 20 mpg to 25 mpg in the space of the next decade - as consumers started to rank fuel economy much more highly in their stated (and demonstrated) preferences in what they found important in new vehicles. The market completely reversed course as consumers changed their preferences, and the SUV market share actually started to decline for the first time since the early 1980’s. Once gas prices dropped again after the Great Recession, consumers again switched back to SUV’s.
If gas prices remain high, we will probably see a repeat of that phenomenon, and we’ll see sedans/coupes claw back market share at the expense of larger SUV’s.
https://nepis.epa.gov/Exe/ZyPDF.cgi?Dockey=P1013L1O.pdf (pages 17 and 22 in particular)
Albaby