Australian Gasoline Price Elasticity

by Dave Kimble at www.peakoil.org.au

I was pondering what the impact of gasoline price rises might be on the demand in Australia. So I extracted data from ABARE's Mineral Statistics for Automotive Gasoline Sales (all types), and the national average price of ULP in AU$ per Litre from AIP (Terminal Gate Price), and charted the data.

It is clear there is an annual cycle in the sales figures - highest in Q4, lowest in Q2, and there seems to be a downward trend as well. So I used Excel's Solver function to disentangle the two features.

In the chart the blue line is actual Sales (in megalitres per quarter), and the green line is the best fit for a linearly decreasing trend and with the same seasonal fluctuations each year. You can see they are a pretty good match, which implies there is no other factor involved:



The overall trend in Sales is a 1% reduction per year, which is perhaps due to more people driving diesel-powered 4WDs more of the time.

So where is the impact of price on demand ?
There isn't one, despite the price increasing 72% and then falling back.

This means that gasoline consumption is very inelastic.
I wonder, therefore, what impact will the ETS/Carbon Tax have on car emissions?

Dave Kimble