Gasoline Demand Analysis: Case Studies and Elasticity

This lecture discusses the analysis of gasoline demand in Switzerland, focusing on the impact of price changes and taxation. The instructor presents a case study from 1993, when fuel duties on gasoline were raised by 20 cents per liter. The effects of this policy are examined through a comparison of gasoline consumption in 1992 and 1994, revealing a 7.3% decrease in consumption alongside a 17% increase in price. The elasticity of demand is calculated, indicating that gasoline demand is inelastic, meaning that significant price increases are required to achieve substantial reductions in consumption. The lecture also explores historical trends in gasoline prices and consumption from 1975 to 2019, highlighting the relationship between price fluctuations and demand. Additionally, the instructor introduces the concept of the 'green paradox,' discussing how policies aimed at reducing fossil fuel consumption may inadvertently lead to increased global fossil fuel use. The lecture concludes with a discussion on the implications of these findings for future energy policies.