STATE DIFFERENCES IN THE DEMAND FOR GASOLINE: AN ECONOMETRIC ANALYSIS.

State highway gasoline sales per household in 1975 ranged from 864 gallons annually in New York to 2222 gallons in Wyoming. This study addresses the question of why these differences exist. A two-phase explanatory modeling approach was employed. A demand equation relating highway gasoline sales to socioeconomic variables is first estimated using data from the states and District of Columbia for 1966-1975. The demand equation also produces quantitative estimates of state-specific deviations from predicted consumption levels. In the second phase these state-specific effects are regressed against a set of cross-sectional variables describing such state characteristics as spatial structure, climate, and employment in agriculture. State highway gasoline sales per household were found to be negatively related to population density, urbanization, percentage of agricultural employment, severe winter weather, and samll car share of the vehicle fleet. Positive relationships were found with the percentage of the population aged 18-44 and the level of tourist activity.