15 August 2010

Wellington rail patronage growth largely driven by petrol price changes

In a previous post linking to Greg Mankiw's cross-price elasticity of demand examples, I noted that the car park at my local railway station seemed fill up when petrol prices went up. I recently found the two data series and graphed the relationship to see if I could confirm this.

The graph below and the R-squared value of 0.76 indicate that the changes in petrol prices have in fact been quite strongly related to changes in Wellington train patronage. For each cent the average quarterly price of petrol rises Tranz Metro can expect to have seen patronage rise by just under 8,000 passenger journeys per quarter.

I downloaded the data series for the inflation-adjusted quarterly average price of regular petrol from here UPDATED on the New Zealand Ministry of Economic Development web site. The rail passenger numbers come from here UPDATED on the Metlink web site.

It would be interesting to see what the relationship is with respect to other urban rail passenger systems, particularly in Auckland.

Meanwhile another factor is currently influencing rail passenger demand in Wellington. Service disruptions, while the system goes through a massive upgrade, are driving down demand as some rail commuters resort to more reliable alternatives transport modes (see Dominion Post story dated 13 August 2010).

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