Ruhr Economic Papers

Ruhr Economic Papers #401

How Full Is the tank? – Insights on Short-run Fuel Price Reactions from German Travel Diary Data

by Nolan Ritter, Christoph M. Schmidt and Colin Vance

RWI, RUB, 02/2013, 22 S./p., 8 Euro, ISBN 978-3-86788-456-3 DOI: 10.4419/86788456



We provide evidence that motorists respond to short-run fluctuations in fuel prices at the gas pump and not on the road. Employing variants of censored panel regression to control for unobserved heterogeneity and censoring of the dependent variable, we find that the fuel price has a large and negative impact on the quantity of fuel purchased, but no significant impact on the subsequent distance driven per day until the next refill. Over the short-run, drivers thus appear to cope with high fuel prices by adjusting fuel purchases with each visit to the filling station, but without altering their daily mileage.

JEL-Classification: C33, Q41, R41

Keywords: Panel data; households; driving behavior; tanking behavior, fuel price

Published as:

Ritter, N., C. M. Schmidt and C. Vance (2016), Short-run fuel price responses: At the pump and on the road. Energy Economics 58 : 67-76. DOI: 10.1016/j.eneco.2016.06.013