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Gas prices go down, driving goes up

Well, duh.

The reports are anecdotal at this point, but it would be odd if the large decline in gas prices didn’t have some effect on people’s behavior. People like to go places. When going places gets cheaper, I’d expect them to do more of it.

Lawrence J. Goldstein, a director of the Energy Policy Research Foundation, puts it in more poetic terms: higher gas prices over the summer created “not demand destruction but demand reduction, which is largely reversible.” In other words, gas prices weren’t high enough for long enough to bring about any real structural changes. People hunkered down for a while, and now the storm has passed.

**Update:** Ford is re-hiring 1,000 workers in a factory that manufactures gas-guzzling F-150 pick-up trucks, the WSJ reports.

What we need is, I don’t know, some kind of forward-looking policy that encourages people to use less gas. Such a policy would push some costs onto consumers, but it would also help to shield them from the vicissitudes of oil prices by encouraging them to consume less oil in the first place. It would also help us to start to get a leg up on our climate change problem.

In semi-related news, Shai Agassi’s Project Better Place (profiled here) is seeking $700m to build an electric car network in Australia. Project Better Place, you may recall, wants to sell electric cars on a service model, like cell phones: pay as you drive. It’s an intriguing idea, a total long shot (meaning, likely to fail), and another indication that driving in the future will look very different than it does today.

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