The effect of fuel prices on traffic flows: evidence from New South Wales

Crawford School of Public Policy | Arndt-Corden Department of Economics

Event details

PhD Seminar (Econ)

Date & time

Friday 12 April 2019


#132 Crawford Building, Seminar Room 1, 1 Lennox Crossing, ANU


Tong Zhang


Associate Professor Paul Burke, Economics PhD Seminar Convener

Understanding how traffic flows respond to fuel price changes is important for traffic control. This study utilises hourly data from 2010 to 2017 to investigate the relationship between fuel prices and traffic flows in the state of New South Wales, Australia. The data are taken from 118 traffic count stations and provide 11.6 million observations. The findings suggest that higher petrol prices do reduce traffic flows, with an effect size that is very inelastic (–0.03 to –0.1). The elasticity is smaller during peak periods than off-peak periods. Road use in the Sydney central business district is less fuel-price responsive. The elasticity is larger on toll roads than toll-free roads, and for highway relative to non-highway travel. The research also finds that people are more likely to use public transport when fuel prices are higher. Applications of the results will be discussed.

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