High Cost of Lower Prices

Categories: News

Gas prices in Dallas continue to fall, according to the Dallas Business Journal, which attributes it to "calmer weather." "Dallas motorists are paying about $2.54 a gallon for regular, self-serve gasoline, about 12 cents less than last week," the article says. And maybe that's not such a good thing, according to an article from Slate:

"Practically speaking, the only hope of changing America's driving habits is a hefty price increase that lasts. For, oh, five years. The data show that after that long, even the response of American drivers to higher prices can be pretty sizable. Five years gives people the time to come up with substitutes. Higher commuting costs over that many years could induce you to buy a smaller car, move closer to work, find a car pool for your kids. Of course, that's why Hurricane Katrina is not likely to have a lasting impact on gasoline use. It's a big blip, but only a transitory one. Which means it's exactly what consumers don't change their behavior for."

Slate also points out that it doesn't really matter what gas prices are, "we'll just keep on truckin'":

"In repeated studies of consumer purchases over the years in the developed world, drivers in the United States consistently rank as the least sensitive to changes in gas prices. Even when gas gets expensive, we just keep on truckin'. The latest estimates, based on a comprehensive study released in 2002, predict that if prices rose from $3 per gallon to $4 per gallon and stayed there for a year (far greater and longer than the impact of Katrina), purchases of gasoline in the United States would fall only about 5 percent."
--Jesse Hyde
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