Image via Wikipedia
US gasoline consumption peaked in 2006 and was about 8 per cent below the peak in 2010. Consumption per person has fallen more than 10 per cent.In other words, the U.S. may have hit "peak gasoline." And it doesn't appear to be just a result of the global financial crisis. Quiggin points out that the 10 per cent drop in consumption is roughly what you'd expect from a short-term price elasticity of -0.25 and an increase in prices of about 40 per cent.
Furthermore, he argues that the short-term elasticity of -0.25 understates the impact on demand, "since in the long run people can change their driving habits, reduce their stock of cars, and choose more fuel-efficient cars". The long-term reduction in gasoline demand could be as much as 40 per cent or even more.1