In 1990 California transportation accounted for 41% of California greenhouse gas (GHG) emissions. California ARB(See Frame 6).
Will increased fuel costs reduce GHG emissions?
Or put another way, what might be the relationship between buying a car that used less fuel when gasoline prices go up? The Energy Institute at University of California Berkeley Haas Business School has issued an interesting study that proposes an answer. Titled Pain at the Pump, thee economists used the increase of fuel cost from close to $1 in 1999 to $4 in 2008 to perform a study of consumer's vehicle purchasing costs.
Their conclusion? A one dollar ($1.00) increase in fuel cost will increase new car sales among the most fuel efficient cars by 20% and reduce purchases of low mileage new vehicles by -24%.
As the authors put it "In the new car market, the adjustment is primarily in market shares, while in the used car market, the adjustment is primarily in prices. For a $1 increase in gas prices; the price adjustment for used cars is $2839."
"Pain at the Pump: The Differential Effect of Gasoline Prices on New and Used Automobile Markets" Meghan R. Busse, Christopher R. Knittel and Florian Zettelmeyer. Energy Institute at Haas School of Business, University of California Berkeley. December 2009. 59 p.
http://ei.haas.berkeley.edu/pdf/working_papers/WP201.pdf
