Gasoline Consumption Still Down

I remain amazed at this graph from EIA:

gasoline consumption

gasoline consumption

Consumption for the third week of December (the most recent available) jumped over the previous week, but it’s still 6 percent below the same week a year ago. Look at the right-hand tail on that graph!

The price, meanwhile, is $1.44 per gallon below last year at this time. You’ll recall from that economics class that you took many years ago that, ceteris paribus, (Gawd I’ve been wanting to say that!) a reduction in price leads to an increase in the quantity demanded. But ceteris is not paribus currently, on account of the whole economy being in the crapper and all, which means that income elasticity has taken hold, and we’re demanding an awful lot less gasoline.


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