Spread the news, especially to the Air Resources Board. California drivers respond to price signals. Judging from its skepticism of market solutions – embodied by the draft blueprint for greenhouse gas controls, which minimized the role of markets in achieving emission reductions – the Board doesn’t buy this. But recently-released gasoline sales data for California demonstrate that drivers do respond to higher gasoline prices.

The State Board of Equalization recently released its March, 2008, gasoline consumption report, which shows taxable gasoline sales falling by more than three percent from a year ago, and by 5.5% per capita from two years ago.

More recent figures over a longer time horizon from the Energy Information Administration show a similar trend. May per capita gasoline sales were down nine percent per capita from a year ago. Obviously, neither of these agencies has yet published sales results from the steepest run-up of gasoline prices deeper into the summer. But common sense shouts that consumption will be even lower.

Once again, consumers have demonstrated that they will respond to market signals. One hopes the Air Resources Board will rethink the direction of their Scoping Plan, and show as much confidence in California market participants.