Consequences of consuming petroleum in transportation-e.g., air pollution, global warming, energy insecurity-have stimulated interest in alternative automotive fuels and in vehicles that can use multiple fuels and combinations of fuels. Consumer behavior in choosing motor fuels for flexible- or dual-fuel vehicles will likely be a key factor in creating and maintaining stable markets for new fuels. This paper explores the implications of recent studies on the sensitivity of choice of gasoline grade to price. It analyzes natural gas vehicle owners' refueling behavior, based on a survey of natural gas vehicles in Canada. The paper uses statistical models to estimate the importance of performance, range, refueling convenience, and other factors in the fuel choice decision. Choice of gasoline grade is highly sensitive to fuel prices. The cost advantage of natural gas also is of paramount importance for natural gas users. However, refueling convenience is essential for overall satisfaction and is a major factor in the frequency of natural gas use. Alternative fuels not only must be cost competitive with gasoline but initially will require a cost advantage so as to overcome range limitations and refueling inconvenience. Copyright 1990 Western Economic Association International.
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