Long term price elasticity of gasoline is high

The low (10% or less) price-sensitivity for gasoline Dan Sperling cites is short-run only.

The long-run price-elasticity of gasoline demand is invariably much higher since it can reflect long-term investment decisions by households in buying more efficient vehicles, by automakers in designing and producing them, and by everyone in making location decisions that reduce driving.

Sperling's counterpart at UC-Irvine's Institute of Transportation Studies, Ken Small, looked at pretty much the same gasoline data as Dan and observed the same low (under 10%) short-run price-elasticity. Unsurprisingly but importantly, Small found gasoline's long-run price-elasticity to be much higher, approximately 40%. Using that figure, and making assumptions similar to Sperling's about the potential for substituting lower-carbon fuels.

The Carbon Tax Center found that that a ramped-up carbon tax that increased the price of gas 10 cents a gallon every year for a decade would reduce CO2 emissions from motor vehicles further and faster than the Low-Carbon Fuels Standard Sperling advocates in his Op-Ed.

Charles Komanoff, co-founder of the Carbon Tax Center. 
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