Effects of Fuel Price Fluctuation on Individual CO2 Traffic Emissions: Empirical Findings from Pseudo Panel Data

Globalized concerns about greenhouse gasses and increased energy consumptions have stimulated research in transportation about the relationships between fuel prices and emissions. Many researchers have found that higher fuel price can reduce fuel consumption and CO2 emissions through a number of transmission mechanisms. However, most prior studies have been based on aggregate data and therefore do not reflect individual or household CO2 adaptation behavior. Moreover, most studies have used cross-sectional data which inherently limit the study of dynamic effects. This paper therefore uses a pseudo-panel approach to estimate a dynamic model of transportation energy consumption and CO2 emission. Seemingly unrelated regression analysis is used to reveal the interrelations between several dimensions of individual travel behavior such as the number of trips conducted, CO2 emission, travel distance and fuel price. The results indicate that increasing fuel prices have negative effects on vehicle miles travelled, fuel consumption and CO2 emissions, but positive effects on travel distance by public transport and slow modes.