{"id":66530,"date":"2022-12-28T02:38:08","date_gmt":"2022-12-28T07:38:08","guid":{"rendered":"https:\/\/world.edu\/?p=66530"},"modified":"2022-12-28T02:38:08","modified_gmt":"2022-12-28T07:38:08","slug":"is-it-good-or-bad-news-that-the-price-of-gasoline-and-diesel-falls","status":"publish","type":"post","link":"https:\/\/world.edu\/is-it-good-or-bad-news-that-the-price-of-gasoline-and-diesel-falls\/","title":{"rendered":"Is it good or bad news that the price of gasoline and diesel falls?"},"content":{"rendered":"

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\nGasoline and diesel are the main causes of urban pollution in Spain, which cause\u00a0serious damage to human health<\/a>\u00a0.\u00a0They are also responsible for much of our contribution to climate change.<\/p>\n

Both the price of gasoline and diesel\u00a0have skyrocketed due to the current energy crisis<\/a>\u00a0and, as a result, their consumption has decreased.\u00a0But the trend has changed, and currently its cost is falling.\u00a0Although this news is positive for our pockets, it is not so much for the environment.<\/p>\n

Deaths caused by pollution<\/strong><\/h4>\n

Gasoline and diesel are fossil fuels, the main sources of CO\u2082 emissions that cause climate change.\u00a0In addition, fossil fuels emit many other pollutants with very harmful effects, especially for human health.<\/p>\n

The\u00a0European Environment Agency<\/a>\u00a0attributes more than 400,000 premature deaths a year in the EU to air pollution.\u00a0These deaths are around<\/p>\n

In Spain, traffic is the main source of urban pollution.\u00a0Therefore, it is also the main cause of such premature deaths.\u00a0In particular, air pollution causes more than\u00a024,000 premature deaths per year in Spain<\/a>\u00a0.<\/p>\n

Effects of the price increase on drivers<\/strong><\/h4>\n

The relationship between the demand for a good and its price is the price elasticity of demand.\u00a0For most goods, this elasticity is negative.\u00a0That is, when the price increases we expect consumption to decrease and vice versa.<\/p>\n

In the case of fuels, calculating this elasticity is quite complex, since its demand is indirect from the use of vehicles.\u00a0In addition, there are other factors that affect the demand for fuel, such as consumer income or the composition of the vehicle fleet.\u00a0This last factor is in turn affected by the price of fuel, which can encourage current cars to be replaced by electric ones or that\u00a0consume less fuel per kilometer<\/a>\u00a0.<\/p>\n

The effect of fuel prices on the vehicle fleet is in the medium and long term.\u00a0Thus, in the short run, elasticity tends to be relatively rigid.\u00a0That is, the price increase does not produce large decreases in demand, since many people find it difficult to reduce their consumption.<\/p>\n

However, the elasticity tends to be much higher in the long run.\u00a0The reason is that the price increase can cause the aforementioned changes in the vehicle fleet.\u00a0You can also get other steps taken to reduce or eliminate dependency on cars.<\/p>\n

Studies\u00a0confirm that the price elasticity of gasoline and diesel is low in the short run, but markedly higher in the long run\u00a0. <\/a>They also\u00a0show that the greatest effect occurs when the price increase exceeds its all-time high<\/a>\u00a0.\u00a0Conversely,\u00a0the effects are insignificant if the increases are below the maximum<\/a>\u00a0.<\/p>\n

In addition,\u00a0the effect on demand of the increase in income is much greater than that of prices<\/a>\u00a0.\u00a0The income effect occurs because the more \u201crich\u201d, the more we consume.\u00a0As a consequence, the effect of higher income tends to cancel out the effect of price increases.<\/p>\n

Is car use going down?<\/strong><\/h4>\n

We can calculate the evolution of consumption using the\u00a0statistics<\/a>\u00a0of the first nine months of 2022. Let us thus compare 2022 with the same period of 2019 (last \u201cnormal\u201d year).\u00a0The result is that the average consumption of gasoline 95 has increased by 9%.\u00a0Diesel A has been reduced by an average of 5%.<\/p>\n

These calculations indicate an increase in the registration of gasoline cars and a decrease in that of diesel cars.\u00a0But it must be considered that much more diesel is consumed and that its energy power is much greater than that of gasoline.\u00a0Taking this into account, the result is a decrease in the global consumption of automotive fuels.<\/p>\n

However, the reduction in consumption is much lower in percentage than the rise in prices.\u00a0This is what we should expect, given the low price elasticity in the short term.\u00a0Including the discount of 20 cents per liter approved by the Government, the comparison between the\u00a0month with the highest average prices in 2022<\/a>\u00a0(June) and the\u00a0average for 2019<\/a>\u00a0yields the following results:<\/p>\n