With fuel prices driving inflation, why are there still so many darn cars on the road?
If you are expecting clear sailing on the highways this coming long weekend because soaring gas prices have forced all the other drivers — except you, of course — to leave their cars at home, you might want to think again.
Some motorists insist that $2-a-litre gasoline means they'll drive a lot less (new window), but people who study Canadians' love affair with their cars are skeptical — and they have the research to back them up.
Canadian economists who have investigated the subject say there are rational economic reasons why people keep driving despite the rising cost of fuel.
And except for those on the tightest of budgets and with the most convenient alternatives, gas and diesel prices must be not just much higher but predicted to stay high in order to convince most motorists to change their ways. People are willing to give up other things before they give up driving.
The whole idea of the traditional economic 'the price goes up, people buy less' doesn't really apply when it comes to gas, Clarence Woudsma said from his van at 8 a.m. one day last week as he negotiated the roughly 60 kilometres from his home in Woodstock, Ont., to the campus of the University of Waterloo, where he was running a workshop on how municipalities adapt to climate change.
After the lessons of working from home during the pandemic, Woudsma, an associate professor at the southwestern Ontario university's School of Planning and author of a book on freight transport (new window), makes the trip only when he needs to be at the campus.
But as with so many Canadians, there is simply no practical alternative. Commercial traffic, dependent on soaring diesel, has even fewer options, Woudsma said.
Statistics Canada said it doesn't have hard figures relating fuel prices to road traffic. U.S. data assembled by transport researcher Michael Sivak (new window), while skewed by pandemic effects and an increase in commercial shipping, showed that even as prices went from the lowest in years (new window) to the highest, traffic did not fall as prices rose.
As economist Noha Razek explained on the phone last week, the economic principle is called elasticity, which she defines as
the responsiveness of consumption to the change in price.
In 2012, Razek, who now teaches at the University of Regina, co-authored a research report looking into how effective future carbon taxes would be on fuel consumption (new window). The report noted that the demand for fuel was inelastic.
If fuel went up to $10 a litre tomorrow, we would probably see a pretty dramatic change in behaviour, said Bruce Hellinga, a University of Waterloo engineering professor who specializes in transportation. But, he noted, current increases simply aren't enough to compensate for the perceived costs of switching to another mode of travel, especially in the short term.
Non-discretionary, no alternative
As with Woudsma's commute, many trips are what Hellinga calls
non-discretionary — such as getting to work, to the doctor or shopping for groceries — and alternative modes of transport are unavailable, expensive or inconvenient.
Even when there are alternatives, Hellinga pointed to studies looking at how to convince drivers to take public transit that showpeople think of time as a cost. And weekends away? They are also precious.
People place a very high value on their recreational trips, Hellinga said, something confirmed by the Canadian Index of Wellbeing (new window), which shows jaunts out into nature make people feel healthy and satisfied.
That means people who can afford the cost are willing to pay more. Even those on tight budgets will give up other expenditures for the continued convenience of driving, which is already expensive apart from gas, said Colleen Kaiser, a low carbon transportation specialist with the Smart Prosperity Institute, an environmental think-tank based at the University of Ottawa.
Buying less fuel doesn't cut the high fixed costs invested in running a vehicle, such as purchase price or lease or loan payments and insurance, she said. Depending on your vehicle and how much you're on the road, fuel costs may be a relatively small portion of total driving costs.
Seductive and addictive
Research by economists Sumeet Gulati and Werner Antweiler at the University of British Columbia in Vancouver shows that the advantages of personal mobility are seductive, even addictive.
People don't seem to be able to make switches to either driving less or changing transportation modes, Antweiler said.
But the research I've done with my colleague ... points to a somewhat different picture in the long term.
WATCH | Canadians face sticker shock at the gas pump:
Those deciding whether to start driving may conclude it is too expensive. If people believe prices are likely to stay high, they are willing to make changes in their lifestyle, such as moving closer to work or to somewhere with good public transit, but those kinds of decisions take time.
Antweiler says the most common option for those already hooked on the pleasures of driving — seen in Europe and following the 1970s oil crisis in North America — is to switch to a more fuel-efficient vehicle (new window).
In the modern context, that may be a hybrid or an electric vehicle. Although such vehicles are currently in short supply, he expects that switch to happen again.
First, people need to believe these price changes are permanent, not temporary, Antweiler said, and then the change will come gradually as drivers replace their aging cars.
People see that prices are higher and say, 'OK, maybe the next car I'm going to buy isn't going to consume 12 litres per hundred kilometres, but maybe only eight or six.
Don Pittis (new window) · CBC News