Understanding the sensitivity of gasoline demand to changes in prices and income has important implications for policies related to climate change, optimal taxation and national security, to name only a few. While the short-run price and income elasticities of gasoline demand in the United States have been studied extensively, the vast majority of these studies focus on consumer behavior in the 1970s and 1980s. There are a number of reasons to believe that current demand elasticities differ from these previous periods, as transportation analysts have hypothesized that behavioral and structural factors over the past several decades have changed the responsiveness of U.S. consumers to changes in gasoline prices. In this paper, we compare the price and income elasticities of gasoline demand in two periods of similarly high prices from 1975 to 1980 and 2001 to 2006. The short-run price elasticities differ considerably: and range from-0.034 to-0.077 during 2001 to 2006, versus-0.21 to-0.34 for 1975 to 1980. The estimated short-run income elasticities range from 0.21 to 0.75 and when estimated with the same models are not significantly different between the two periods.

Low carbon fuel standards (LCFSs) are rapidly becoming an integral part of the national debate over how to reduce greenhouse gas emissions. On January 18, 2007, California Governor Arnold Schwarzenegger signed an executive order launching a low carbon fuel standard to reduce the carbon intensity of fuels for light-duty vehicles.1 The standard, which limits an industry's weighted average carbon emissions rate or, equivalently, the carbon emissions per unit of output, allows fuel producers to achieve a given carbon emissions rate by flexibly altering their production of fuels.2 Senators John McCain and Barack Obama have both called for 1 The executive order S-01-07 states the LCFS shall "reduce the carbon intensity" of fuels. An accompanying white paper states that providers must "ensure that the mix of fuel … meets, on average, a declining standard for GHG emissions."2 There is much ambiguity in the design of an LCFS, including what output is covered (e.g., light-duty versus heavy-duty vehicle fuel), how output is measured (e.g., energy versus miles), and how emissions rates are measured (e.g., upstream versus downstream). These policy design issues are currently being debated for the California LCFS. ($60-$868). (JEL Q54, Q58)

Understanding the sensitivity of gasoline demand to changes in prices and income has important implications for policies related to climate change, optimal taxation and national security, to name only a few. While the short-run price and income elasticities of gasoline demand in the United States have been studied extensively, the vast majority of these studies focus on consumer behavior in the 1970s and 1980s. There are a number of reasons to believe that current demand elasticities differ from these previous periods, as transportation analysts have hypothesized that behavioral and structural factors over the past several decades have changed the responsiveness of U.S. consumers to changes in gasoline prices. In this paper, we compare the price and income elasticities of gasoline demand in two periods of similarly high prices from 1975 to 1980 and 2001 to 2006. The short-run price elasticities differ considerably: and range from-0.034 to-0.077 during 2001 to 2006, versus-0.21 to-0.34 for 1975 to 1980. The estimated short-run income elasticities range from 0.21 to 0.75 and when estimated with the same models are not significantly different between the two periods.

A variety of subsidies to promote energy efficiency and renewable energy have been adopted by electric utilities, localities, and state governments. We study the California Solar Initiative and find that upfront rebates have a large effect on residential solar installations. We exploit variation in rebate rates across electric utilities over time and control for time-varying factors that affect solar adoption. Our preferred estimates suggest increasing rebates from $5,600 to $6,070 would increase installations by 10 percent. Overall, we predict 53 percent fewer installations would have occurred without subsidies. Over 20 years, we estimate these additional installations reduce carbon dioxide emissions between 2.3 and 3.4 million metric tons and local air pollutants (NOx) by 1,100 to 1,700 metric tons, about as much as is produced by a small to mid-sized natural gas power plant. Of the $440 million in rebates awarded, $121 million were rents to installations that would have taken place absent rebates. Back of the envelope calculations suggest program