How would a gas tax reduce consumption?

Question: How would a gas tax reduce consumption?

Answer: A tax on gasoline makes gasoline more expensive, and as such, tends to cause people to consume less of it. While some have suggested that this is preposterous since "A rise in fuel taxes isn't going to cause me to move closer to work!!!", there are a number of smaller ways people will reduce their consumption. The article How Can I Reduce Gas Consumption? gives a number of ways, such as:

• Taking public transportation.
  
  
• Bicycling or walking, if possible.
  
  
• Carpooling to places like work or to children's events - instead of each parent driving only their child to hockey practice.
  
  
• Invest in a motor scooter or motorcycle for quick trips to local stores.
  
  
• Instead of going to the post office, supermarket, and hair salon in three seperate trips, pool them together in one trip.
  
  
• Keep tires properly inflated.
  
  
• Change spark plugs and air filters on a regular basis.
  
  
• Invest in a more fuel efficient car.
  
  

Not all of these options will work for all people, but there a number of ways to reduce fuel consumption. And people typically do reduce their fuel consumption when prices rise. The article What's the Price Elasticity of Demand for Gasoline? we see that on average:

A 10% hike in the price of gasoline lowers quantity demanded by 2.6% in the short-run. In the long-run (defined as longer than 1 year), the price elasticity of demand is -0.58; a 10% hike in gasoline causes quantity demanded to decline by 5.8% in the long run.

As with almost every other good in our economy, a raise in price tends to lower consumption. Gasoline is no exception to the rule.

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