Fueling Alternatives: Evidence from Real-World Driving Data

• Environmental and Energy Economics Workshop

Date and Location

Wednesday, October 29, 2014, 4:10 PM - 5:30 PM
ARE Conference Room, 2102 Social Sciences and Humanities

Abstract

Development of a transportation system based on an alternative fuel requires both drivers to invest in vehicles and fueling stations to invest in infrastructure. We study the interaction between these decisions using real world driving data that identifies when and where drivers stop to purchase gasoline. We estimate a discrete choice model for the driver’s choice of refueling location and show that drivers make a trade-off between the price of fuel and the time taken to deviate from their route. With these results, we simulate the willingness of drivers to adopt alternative fuel vehicles under different assumptions about the density of the alternative fueling network. The results suggest that the marginal cost of each alternative fuel and the fixed cost of alternative fuel vehicles and alternative fueling stations can dramatically change the market equilibria and alter the role of government in helping to create a self-sustaining alternative fuel market, but that subsidizing a new alternative fuel network would not be prohibitively expensive.