A gas tax promotes sustainable transportation

In this paper, we analyze the relationship between the commuting behavior of workers in the United States and gasoline taxes, with a focus on driving and “green” modes of personal transport (i.e., public transport and walking/cycling). The United States is among the countries with the highest consumption of gasoline in the world (over 130 billion gallons of gasoline annually, Gillingham et al., 2015), generating around one-third of the US greenhouse gas (GHG) emissions of the country (EPA, 2014). In order to implement efficient policies aimed at decreasing the consumption of energy, GHG emissions, and improving management of the environment, policymakers need to know the effects of different policy measures, such as increasing fuel taxes, or the Zero Emissions Vehicle (ZEV) mandate, both of which critically depend on the behavior of consumers. Thus, it is important to analyze the consumer response to changes in fuel taxes in their private transport decisions, and we here focus on the relationship between commuting time and gasoline taxes.

Despite that consumers may respond differently to changes in taxes than to changes in prices (Li et al., 2014), it is expected that consumers will respond similarly to each of those factors. Prior research has found negative price elasticities for the consumption of gasoline, based on driving behavior (Dahl and Sterner, 1991; Greening et al., 2000; Small and van Dender, 2007; Hughes et al., 2008; Burke and Nishitateno, 2013; Gillingham, 2014; Hymel and Small, 2015; Chen et al., 2017), and similar evidence has been found for the relationship between gasoline taxes and the consumption of gasoline (Dahl, 1979; Goel, 1994; Bento et al., 2005; Li et al., 2014; Liu, 2015). But the research to date has focused on the effect of gasoline taxes/prices on driving, leaving aside other modes of transport. Such analysis is relevant, as it has implications for GHG emissions. For instance, the use of public transport may be beneficial for the environment in comparison to private vehicles, as it helps to reduce GHG emissions (Stanley et al., 2003; Chapman, 2007; Gössling and Choi, 2015; Holian and Kahn, 2015). Also, the use of physical modes of transport contribute more to the reduction of GHG emissions as they are, ultimately, ‘zero carbon’ and an environmentally friendly solution for personal transport (Chapman, 2007). Thus, in order to have a complete view of the effect of tax instruments, we need to ask whether the reduction in driving due to an increase in fuel taxes devolves to a greater use of public transport, if it results in more walking/cycling, or both.

Within this framework, we analyze how the time workers spend driving to/from work (commuting), and using “green” modes of transport, such as public transport and walking/cycling, are affected by gasoline tax rates. To that end, we use the 2003–2015 American Time Use Survey (ATUS) to measure the commuting time of workers in the US. Millions of workers in the US commute every working day (on average 45 min per day, according to Gimenez-Nadal and Molina, 2016, and Gimenez-Nadal, Molina and Velilla, 2018a, 2018b). This activity, obviously, contributes to the overall consumption of energy. Gasoline tax rates differ by State, and may also change over time at the State level, which allows us to analyze how these differences over time and across States are related to consumer behavior. We analyze the relationship between the time devoted to commuting during a working day, and gasoline taxes. We also analyze the relationship between gasoline taxes and the proportion of daily commuting of three different modes of transport: private, public, and physical. Thus, we can determine whether reductions in the driving time of workers due to higher gasoline taxes are related to more time in commuting by public transport or physical modes of transport, or both.

Higher gasoline taxes are related to less time spent in commuting. To the extent that most of the commuting in the US is done by car, our results can be interpreted as a negative relationship between private car use and gasoline taxes, which is consistent with prior evidence on the intensive margin of driving. We also observe that higher gasoline taxes are related to a lower proportion of commuting time by private car, and to a higher proportion of commuting time by both public transport and physical modes of transport. In other words, higher gasoline tax rates are related to a substitution from driving to alternative “green” modes of transport.

Our contribution to the literature is twofold. First, we contribute to the analysis of the effect of gasoline taxes on driving for commuting to/from work, complementing prior analyses. To the best of our knowledge, time-use data has not previously been used in this context, and our results point to a negative effect of gasoline taxes on driving (negative price elasticity). Second, we add a new perspective to the analysis of fuel taxes and energy consumption, by including in the analysis “green” modes of personal transport that may substitute for driving. Our results shed light on the importance of these modes of transport in policy analysis, adding to the assessment of policies and gaining a more complete view of the effects of gasoline taxes on energy consumption and environmental management. Our results open a very promising line of research.

The rest of the paper is organized as follows. Section 2 describes the data and the variables of interest. Section 3 describes the empirical strategy, and Section 4 presents the main results. Finally, Section 5 sets out our main conclusions.