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Originally Posted by BlackArcher101
But does raising the prices actually decrease demand for gas that much? I don't see everyone parking their vehicles and biking everywhere. Businesses aren't about to cut down their consumption as well.
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If you check out the gasoline inventories for the US refining Padd's they are responsive to large increases at the pumps. There are people who are at the low margin for income and thus driving is a bit of a luxury for them. They stop driving in periods like this. There are logistics people in many companies that adjust shipping methods based on fuel costs. Airlines drop some of their less popular routes. People like you or I might not drive across the country for vacation and choose to go somewhere closer. There are plenty of examples. It doesn't add up to a huge chunk overall but it alieviates some of the difference in demand from the winter season and the 'summer driving season.' This is why the price needs to come up significantly to make any sort of an impact. It needs to be enough of a deterrant for the marginal consumer's fuel usage to get rethought.