One thing that we always say is that, while the short run gas price elaticity is low, about 0.10, the long run gas price elasticity is higher as persistent high gas prices will cause consumers to shop for smaller cars, buy houses closer to work, etc. Maybe we've moved into the long run?
Nearly one in four vehicles sold in the United States in April was a compact or subcompact car, compared with one in eight a decade ago. Of the small cars sold in April, about 27 percent were American models, compared with 20 percent a year earlier. ...The emphasis on smaller vehicles has proven to be a necessity for the recovering auto companies. Rising fuel prices have prompted a steady migration away from bigger vehicles since the spring of 2008, when gas hit $3.50 a gallon. Industry analysts and company executives say the shift is likely a permanent one, as consumers flock to small cars packed with features like heated leather seats, Internet access and voice-activated entertainment systems.