The Price of Gasoline--What If I Don't Wanna Ride the Bus?

It's no surprise to an economist that higher gas prices could lead to less driving:

. . . in an Associated Press-AOL poll conducted last Monday through Wednesday, 58 percent of Americans said they have reduced the amount of driving they do as a result of recent increases in energy prices

To repeat the point made in my earlier posting, higher gas prices should lead to a reduction in the quantity demanded. That's a movement up the demand curve for gas, not a leftward shift in the curve.

The most interesting point in the story is that the use of public transit is up, at least in some parts of the country. We teach this all the time in Economics 101: When the price of X rises, the demand for substitute Y increases (shifts to the right).

I don't like buses, but apparently some people do. They're noisy, smelly, and uncomfortable. Unless the price of gas hits the stratosphere, most people will probably avoid the cheaper substitute provided by public transit, so that rightward shift in demand for public transit might not be very far to the right. In the meantime, rather than ride the bus, I'll confine my contact to looking at pictures of buses.