Determining factors for gasoline consumption in the state of Sao Paulo: the study of gasoline price elasticity

Currently, gasoline is the most used fuel in Brazil and especially in the state of Sao Paulo, the state that consumes the most gasoline in the country, as well as has the highest concentration of gas stations (ANP, 2021) and the largest fleet of vehicles (Ministry of Infrastructure, 2021). The present work aimed to study the gasoline demand and find which factors influence the dynamics of its consumption in the State of Sao Paulo, considering the period between January/2012 and December/2020. Through an econometric approach, this work evaluated gasoline consumption's impacts on variables such as gasoline price, ethanol price, income, unemployment, exchange rate, GDP, number of vehicles, and number of drivers. It is concluded that gasoline can be considered an elastic commodity. Despite the growing growth of the ethanol market and the expansion of alternative energy sources, gasoline is still a significant asset in the State of Sao Paulo. It is also observed that ethanol is a substitute product and that gasoline is an everyday commodity so when individuals' incomes increase, their consumption also increases.