Impacts of Fuel Price Changes on New Zealand Transport

The impacts of petrol price changes on public transportation ridership, petrol consumption, and traffic volume in New Zealand are described. Based on this evidence and that from Australia and other countries, a set of "best estimate" petrol price elasticities for the New Zealand context, of –0.15 for the short run and of –0.20 for the medium run, are recommended. Transportation fuel prices in New Zealand have varied quite dramatically over the last five years. Knowledge of the likely market responses to fuel price changes is important for transportation forecasting applications, such as those for: Transport demand and its associated energy demand; Transport emissions, including the impact of climate change policies; Public transport planning, particularly in regard to future peak demand levels and hence rolling stock requirements; Government taxation revenues; Fuel import demands, and consequent impacts of fuel imports on related macroeconomic variables; and Traffic growth trends, for use in road investment planning and evaluation. Implications of the impacts of petrol price changes on policy making, modelling, and further research are made.

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