How Full is the Tank? – Insights on Shortrun Fuel Price Reactions from German Travel Diary Data

24 Pages Posted: 21 Feb 2013

See all articles by Nolan Ritter

Nolan Ritter

Rhine-Westphalia Institute for Economic Research (RWI-Essen)

Christoph M. Schmidt

RWI - Leibniz-Insitut für Wirtschaftsforschung (RWI Essen); Ruhr-Universität Bochum (RUB); Institute for the Study of Labor (IZA); Centre for Economic Policy Research (CEPR)

Colin Vance

Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI)

Date Written: January 1, 2013

Abstract

We provide evidence that motorists respond to short-run fluctuations in fuel prices at the gas pump and not on the road. Employing variants of censored panel regression to control for unobserved heterogeneity and censoring of the dependent variable, we find that the fuel price has a large and negative impact on the quantity of fuel purchased, but no significant impact on the subsequent distance driven per day until the next refill. Over the short-run, drivers thus appear to cope with high fuel prices by adjusting fuel purchases with each visit to the filling station, but without altering their daily mileage.

Keywords: Panel data, households, driving behavior, tanking behavior, fuel price

JEL Classification: C33, Q41, R41

Suggested Citation

Ritter, Nolan and Schmidt, Christoph M. and Vance, Colin, How Full is the Tank? – Insights on Shortrun Fuel Price Reactions from German Travel Diary Data (January 1, 2013). Ruhr Economic Paper No. 401. Available at SSRN: https://ssrn.com/abstract=2221324 or http://dx.doi.org/10.2139/ssrn.2221324

Nolan Ritter (Contact Author)

Rhine-Westphalia Institute for Economic Research (RWI-Essen) ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany

Christoph M. Schmidt

RWI - Leibniz-Insitut für Wirtschaftsforschung (RWI Essen) ( email )

Hohenzollernstraße 1-3
Essen, 45128
Germany
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Ruhr-Universität Bochum (RUB)

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Institute for the Study of Labor (IZA)

P.O. Box 7240
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Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Colin Vance

Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI) ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany
0049-201-8149-237 (Phone)

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