Friday’s Globe and Mail featured a prediction by Jeffrey Rubin, the CIBC World Markets economist, that damage from Hurricane Gustav and other intense storms this season could cause a sudden spike in gas prices to $1.75 a litre.

Every time there is a price spike, the media runs to the local gas station to cover the “pain at the pumps”. But does that pain translate into a change in behaviour? How much of an impact do gas prices have on the commuting public in the GTA? Do increasing gas prices cause people to make different personal transportation decisions, or are households just absorbing the extra costs?

It appears that gas prices are affecting vehicle purchasing decisions (sorry GM), but are consumers switching from private vehicles to other modes of transportation? I would love to see the research on that. (Perhaps our friends at Metrolinx have some sources they can share? If readers know of recent research on this question, please leave a link in the comments.) [UPDATE: High gas costs pushing people to use public transit, survey finds, Globe & Mail]

Surely demographic factors influence gas price sensitivity and the substitution of one mode of transportation for another. It makes sense that household incomes will affect price sensitivity, with the working poor being hit hardest. At the same time, many service workers need to use private vehicles to get to or perform their work (i.e. not the GO train Bay Street crowd) and have few alternatives. This creates a political problem that will bring calls for action.

But I also believe that there is a relationship to another familiar demographic trend with political and policy implications: Boomer parents versus their Gen Y children.

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