You driving anywhere this weekend? I’m not. Other than a trip to the grocery store, I hope not to get in the car at all. In part that’s the high gas prices talking, but in part it’s a rebound from the fact that I spent the last three days at a conference out at the Rosemont Convention Center, driving two days and taking the el one day. Nothing like sitting in traffic to put me off of driving completely …
If you are driving this weekend, you are not alone. AAA predicts that 38 million Americans will drive at least 50 miles this holiday weekend, an increase on prior years. This level of holiday travel comes despite gasoline prices at or near record high levels.
This spring’s high gas prices are starting to show up in industry data as people substitute from other types of expenditure into gasoline. Several reports suggest that high gasoline prices are responsible for the decline in retail sales last week:
The International Council of Shopping Centers-UBS Index reported Tuesday that its same-store sales fell 1.5 percent for the week ended Saturday, compared with the prior week. On a year-over-year basis, the same-store sales tally increased by 1.9 percent. …
ICSC and UBS take a separate survey to assess the impact gasoline prices on discretionary spending. Niemira noted that the latest survey, conducted May 17-20, found the highest percentage of consumers since October 2005 saying they have cut back on discretionary spending.
This fact suggests the combination of low price elasticity of demand for gasoline and high elasticity of substitution between gasoline and the bundle of all other goods in household consumption. In non-econ-geek-speak, people are willing to give up other consumption to continue their gasoline consumption, even for holiday leisure travel.