From the blog formerly known as Green, Inc:
Are you going away this Memorial Day weekend, and how far are you going to drive?
A lot of economists would like to know. The answers, when gathered for the entire population, will tell them a lot about where the nation’s economy is going....
MasterCard Spending Plus has offered some interesting historical perspective, correlating Memorial Day and summer driving habits with the broader economy. Take the 2007 Memorial Day weekend, for example. With a robust economy, Americans pumped nearly 37 million barrels of gasoline over that three-day weekend as prices at the pump averaged $3.20.
Only a year later, with recessionary clouds looming and prices at the pump 69 cents a gallon higher, Americans pumped 6 percent less gas. For the 2008 summer as a whole, gasoline consumption was down more than 4 percent -– a clear sign of a slowing economy and “demand destruction” caused by higher fuel costs.
As the economy gradually improved and with fuel prices more moderately priced, Americans gradually drove more and consumed more gasoline over the 2009 and 2010 Memorial Day weekends. But gasoline consumption was still more than 2 percent lower in 2010 than it was in 2007 for the holiday weekend.
It’s unlikely that holiday motorists will reach the 2007 gasoline consumption heights again this year. That’s mostly because the economy has still not fully recovered. But slowly, the nation’s car fleet is changing, too. The “cash for clunkers” program took some clunkers off the roads. Manufacturers are making cars more fuel efficient every year. Electric cars are hitting the market. SUVs are not as popular as they were four years ago.
Place your elasticity estimates in the comments section.