The economics blog, Knowledge Problem on how prices effect individuals incentive to conserve: Conservation of resources: Prices change everything
Steven Stoft, at the EU Energy Policy Blog, observes that market driven conservation is a slow process:
Conservation is the main way consumers respond to high market prices. When price goes up, consumption comes down–but it takes a while for the full price effect to play out.
The market eventually shifts demand in the long run, as individuals adjust their behaviors in reaction to higher prices. To what extent will sustained high gas prices cause people to shift their location preferences towards a less gas-dependent urban lifestyle? (assuming high prices are here to stay) How long will it take for us to see a difference in where people prefer to live?
Graph from the NY Times