Lower gas prices dont result in more car travel, says DOE

Lower gas prices donêt result in more car travel, says DOE

Lower fuel prices donêt equate to more car travel, says a recent report by the U.S. Energy Information Administration. So even though the average retail price of regular gasoline has fallen 28 percent from its 2014 peak of $3.70 per gallon, the lower price is not expected to influence demand.

Unlike air travel, car travel is inelastic, meaning it is generally not influenced by the price of fuel. The EIA says it takes a 25 to 50 percent decrease in the price of gas to increase car travel by just 1 percent.

The EIA predicts that –gasoline prices in 2015 will be 23 percent lower than the 2014 average, and consumption in December will be virtually unchanged from year-earlier levels, as increased fuel economy balances out increases in vehicle miles traveled in response to lower prices and other factors.”