Jun 22, 2022 - Energy & Environment

Gas prices aren't leading to less driving — yet

U.S. gasoline consumption by year
Data: Federal Reserve Bank of Dallas, Energy Information Administration; Chart: Simran Parwani/Axios

The rise in U.S. fuel prices isn't yet spurring a major pullback in driving, but that could soon change, a new Dallas Fed analysis finds.

The big picture: Gas demand is historically not very sensitive to prices.

  • But "prices may be closer to consumers' pain threshold than inflation-adjusted prices might suggest," Dallas Fed economist Garrett Golding writes.
  • If they rise higher, "expect consumers to respond by cutting back on fuel consumption and overall spending sooner than later."

What we're watching: Remote work options could reduce demand, per the report, but it's "too early to fully assess the impact."

  • And many low-wage workers — the ones most hurt by high costs — lack that choice.
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