The effect of the oil crisis on the growth in the ownership and use of cars

Abstract

Since the oil crisis of 1973, a number of studies have been made in various countries of the effects of the rise in petrol prices on the level of traffic flow, but rather fewer have attempted to delineate the complex chain of reactions within the car market set off by this impulse. We attempt to do this, using data from the UK.Since 1966 during the prediction stage of the first London Transportation Study it became obvious that low income and high income households had different rates of growth of car ownership, mainly because low income households bought cheap, old cars which vary in quantity and price differently from expensive, new cars. The Greater London Council therefore sponsored a study of car prices by age and size, starting from 1957 annually, and since the oil crisis, evaluated monthly. This has enabled us to examine the strong change in trend that had occurred, with large cars depreciating 15% per annum more than the smallest. The quantities of cars of each size registered each month are available from national statistics and this enables us to say that the previous 1% per annum increase in car size was arrested, with new cars becoming substantially smaller.A model of the car market has been developed which relates on the one hand the price distribution of cars by age, and on the other hand the price distribution of the stock ot cars owned at each household income level. Via the expenditure on car purchase at each household income level and the distribution of the length of time between purchase and resale of cars, a fully dynamic model has been developed to relate expenditure flow and stock. This enables us to test the effect of different trends on the dynamic equilibrium in the car market.The implications of the two trends noted above on the prediction of future car ownership growth are discussed, with the standstill since the oil crisis attributed to petrol prices via the split in household expenditure between purchase and use. The Effect of the Oil CrisisSince the awakening of the environmental conscience in the late sixties we have all become more aware of the consequences of unbridled growth in the demand for personal transportation at the expense of the public. Since Forrester's "Urban Dynamics," we have been able to bring into a sharper focus the complex, interacting nature of our economies, and how short-run

Powering or de-powering future vehicles to reach low carbon outcomes: the long term view 1930–2020

“…The 1973 oil crisis plunged the UK car industry into recession due to a collapse in car buying; consumers had raised their expenditure on fuel but had little left over to buy new cars [6]. In 1975 tax rules for company car purchase were introduced to assist the car industry but in so doing stimulated the design and purchase of larger more powerful cars which are still the bedrock of the UK car buying.…”

Alternative fuels

“…Their cars were far more fuel efficient compared to the American cars. Research shows that in the short-run, the price elasticity of oil is very low, while a car size adjustment is made in the long run, it is here that automobile manufacturers in Japan profited (Mogridge, 1978).…”

Transport, the Urban Pattern and Regional Change, 1960-2010

“…Though rising expenditure on urban public transport could be tolerated in wealthy and growing economies, research cast doubts on public transport's ability to have any significant effect on levels of car use except in large and dense cities, more common in Europe than North America (Grey, 1975;Mogridge, 1978;Urban Transport and the Environment, 1979;Meyer and Gomez-Ibanez, 1981;White, 1982;Goodwin et al, 1983). Though rising expenditure on urban public transport could be tolerated in wealthy and growing economies, research cast doubts on public transport's ability to have any significant effect on levels of car use except in large and dense cities, more common in Europe than North America (Grey, 1975;Mogridge, 1978;Urban Transport and the Environment, 1979;Meyer and Gomez-Ibanez, 1981;White, 1982;Goodwin et al, 1983).…”