Tuesday, September 27, 2005

Demand for Gasoline Inelastic in California

Despite $3-a-gallon gasoline, Californians cannot seem to get out of their beloved automobiles:

John Cherniavsky has engineered a bus-to-train-to-bike commute to work, racing each morning to catch the train in the three-minute window after his bus hits the station.

Jerry Martinez and his wife leave their gas-guzzling Suburban at home in Tracy and drive to their Bay Area jobs in gas-sipping sedans.

Greg Heibel has put off buying an SUV so he can kick the tires on more fuel-efficient vehicles big enough for his growing family.

But despite pain in the pocketbook from soaring gas prices, it's too soon for most middle-income Americans to give up their low-mileage Yukons, sell their Central Valley homes to move closer to work or otherwise radically change their commuter way of life.

It might take years of much higher gas prices to dramatically change the behavior of middle-income or affluent Americans, experts say. In short, $3 gas might make them mad as hell, but they're far from reaching the point where they won't take it anymore.