According to this article, gas has a very inelastic demand curve (at leas in the US, probably here as well):
Quote:
Weekly gasoline demand in April increased as much as 1.9 percent over the same weeks in 2006, even as the average national price of a gallon of gasoline grew from $2.71 to $2.97 by the end of the month, according to Energy Information Administration data.
Only during the first week of May, when prices jumped to $3.05 a gallon, did demand for gasoline abate slightly — by about two-hundredths of a percent, EIA figures showed.
Experts disagree over how high prices have to rise before consumers are shocked into driving less — at least temporarily.
"We might actually see some reaction at $3.50 (a gallon)" nationally, said Larry Compeau, executive officer of the Society for Consumer Psychology and professor of marketing and consumer psychology at Clarkson University in Potsdam, N.Y.
Lars Perner, assistant professor of clinical marketing at the University of Southern California's business school, disagrees, saying the tipping point is more likely $4 a gallon.
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