More Proof that Higher Gas Price Changes People's Behaviour

When others counter the argument of a pigouvian gasoline tax will not decrease gasoline consumption by stating such a tax did not work well on booze and cigarettes, my argument is taxes put on those goods did not go up fast enough.

It is true that those sin taxes did not work as well as they should, but the rate increase of each of those hikes did not break people's "threshold". To illustrate my point, here are two different scenarios:

Imagine that a gas tax is raised 50% over-night and another 50% next month comparing to hikes of 5% per month for the next 20 months. I will bet you a lot of people will change their driving habit with the 50% over-night hike, and consumption of gasoline will drop more in the first scenario than the second - and that is exactly what has been happening with gasoline lately.

To reinforce my argument - gasoline consumption actually dropped in the 70s and 80s after the oil shocks.

My conclusion: If the shocks are big enough and hit them hard enough in a short time-span, people will make changes.

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As Vancouver gas prices soar, so does transit use

Average pump cost hits $1.27 a litre; city's Translink system sees 11-per-cent increase in ridership

LAURA DRAKE

From Friday's Globe and Mail

May 18, 2007 at 4:32 AM EDT

VANCOUVER — Gas prices are up across the country, but no major city has been hit harder than Vancouver with an average pump price of $1.272 a litre for regular unleaded gasoline. It's been climbing steadily toward that record since February.

But as gas prices continue to rise, so does the number of people who use public transit.

From January to April, Vancouver's Translink system saw an 11-per-cent increase in ridership over the same period last year on its light-rail service, while the rest of the system saw a 3-per-cent rise.

At the same time, national public transit use is at an all-time high, according to the Canadian Urban Transit Association.

Gas prices are only one of the determining factors when it comes to choosing public transit, but changes in prices at the pumps have been reflected in ridership numbers in the past, Translink spokesman Drew Snider said. It goes to show that if environmental issues don't necessarily motivate people to be greener, the economy will.

"I think in some ways environment still takes a back seat to a lot of people," he sad "You think you can put up with smelly air and you can't really see the immediate impact of what you're doing, but you can see the gasoline prices."

Gas prices have certainly never been higher - and it doesn't look like they are going to go down any time soon, said Michael Ervin, president of M.J. Ervin & Associates Inc., a Calgary-based energy consultancy.

That's due in part to higher-than-usual levels of maintenance at refineries in North America, which have caused an unprecedented seasonal production decline.

Though that decline is ending, Mr. Ervin said, prices should remain about the same as demand increases with the arrival of summer.

Prime Minister Stephen Harper was asked about the rising costs of gasoline at a press conference yesterday in Waterloo, Ont. (His Conservatives promised, during the 2004 election, to cut 0.7 cents from the gas tax.)

"We became convinced that, quite frankly there was a limited amount we could do with helping consumers specifically with gas prices," Mr. Harper said, saying the GST cut was an alternative tax relief measure put forward by the government.

Although high gas prices are constantly bemoaned by car owners, some people are looking on the bright - or green - side of the trend.

"We believe that we do need to pay higher gas prices that really reflect the full cost of using fossil fuels. What we need is a gas tax, so that the revenues are captured by the government, who can then turn that money around to build the things we need to use less gas," said Ann Rowan, director of the David Suzuki Foundation's sustainability program.

However, Simon Fraser University environmental economist Mark Jaccard said economic reasons to take transit - be it tax credits for bus passes or high gas prices - don't necessarily lead to less cars or less emissions.

"People love cars. Think of a car as a personal mobility device, or a personal status-enhancing device," Prof. Jaccard said yesterday.

Accordingly, Prof. Jaccard said, high gas prices are not a good way to reduce greenhouse gas emissions, nor are they an effective way to get cars off the road. The only way to reduce emissions, he said, is through carbon taxes, which place stiff charges on dumping pollutants into the atmosphere.

With a report from Gloria Galloway

THE BUMP AT THE PUMP

The price for regular gas in Vancouver is higher than in any other major city in Canada.

Vancouver vs. Canada average, Jan.1, 2006 to May 15, 2007

Vancouver: 127.2¢

Canada: 113¢

RETAIL FUEL PRICES

CITY AVERAGES, MAY 15, 2007

Whitehorse	116.7¢
Victoria	125.9¢
Vancouver	127.2¢
Yellowknife	123.2¢
Edmonton	108.9¢
Regina	117.9¢
Winnipeg	112.8¢
Toronto	106.5¢
Ottawa	107.7¢
Quebec City	107.7¢
Fredericton	107.7¢
Charlottetown	115.8¢
Halifax	114.6¢
St. John's	119.5¢

PUBLIC TRANSIT RIDERSHIP

TOTAL VANCOUVER PUBLIC TRANSIT TRIPS*, 2006

Q1: 69.4-M

Q2: 71.4-M

Q3: 69.1-M

Q4: 73.3-M

*Includes bus, Skytrain, Seabus and West Coast Express

SOURCES: NATURAL RESOURCES CANADA, TRANSLINK