Consider the following events:
April 25, 2006: I am interviewed on NPR Morning Edition (here's the interview) and make an inadvertent plea for Americans to "Drive Less!*".
Novermber 30, 2006: CNN.com headline "Americans drive less for first time in 25 years."
Coincidence? Let's examine the evidence:
High gasoline prices not only slowed fuel demand growth and cut sales of gas-guzzling vehicles in 2005, they also prompted Americans to drive less for the first time in 25 years, a consulting group said in a report Thursday.
Normally this is John's pet peeve, but I'll take this one: Higher prices do not decrease demand. Prices rise for one of two reasons: 1) Supply decreases, or 2) Demand increases. The claim above seems to indicate that higher prices are coupled with less consumption of gas. That is a decrease in consumption that has to be caused by a decrease in supply. If demand were decreasing we would see lower prices, not higher prices.
The drop in driving was small - the average American drove 13,657 miles (21,978.8 km) per year in 2005, down from 13,711 miles in 2004 - but it is more evidence that the market works and prices help control consumption, Boston-based Cambridge Energy Research Associates said.
"Price matters," CERA Chairman Daniel Yergin said.
And he doesn't even have a PhD.
[...]
Growth in U.S. demand for gasoline slowed from an average 1.6 percent per year between 1990 and 2004 to 0.3 percent in 2005 and 1 percent in 2006, the report said.
It is simply not possible to measure the growth in demand using a single figure. Growth in demand at what price? What the article should say is "Growth in U.S. [consumption of] gasoline slowed from an average 1.6 percent per year between 1990 and 2004 to 0.3 percent in 2005 and 1 percent in 2006, the report said."
If Drive Less! were catching on, we would expect to see less consumption and lower gas prices. Gas prices are lower than they were a year ago and consumers are driving less. Therefore, Drive Less! is working!** You can send you thank you's to me in the comment section below.
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*For those new to Env-Econ, "Drive Less!" is an answer to the question "What can we as consumers do to bring down the price of gas?" "Drive Less!" places the burden on drivers to take action. Gas prices are high because drivers are willing to pay high gas prices. "Drive Less!" and gas prices will fall.
**Yes I know this is the classic logical fallacy confusing correlation and causation. But a guy can dream can't he?
