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Behavior frequently is a function of perception.  When the price of a gallon of gasoline in Texas hit $4.00, significant numbers of Texans changed their behavior.  The number of people using public transport (all modes) rose dramatically.  The SUV and pick-up markets collapsed.  The race to smaller, more fuel efficient vehicles was on.  And the amount of driving declined dramatically, as reported in the state's major media outlets.  Yet, at $4.00 per gallon the real price of gasoline, when adjusted for inflation, was only a tad higher than it had been in 1980.  But $4.00 was an important psychological (perceptual) barrier; it triggered a behavioral change in many if not most Texans, especially those who had an option.  When the gasoline bubble broke - my term - people went back to their old habits, i.e. buying and driving gas guzzling SUVs and pick-ups, ditching their new fondness for public transport, etc.  Amtrak and the airlines would be impacted by the run up in fuel prices.  But they hedge the cost of their fuel, which few if any motorists can do.  Accordingly, the impact is not likely to be one for one.   Inflationary expectations are part of the reason the price of gasoline has risen significantly over the past year.  But devaluation of the dollar, the continuing current accounts deficit, and the increase in demand, especially from emerging market countries like China, India, etc., are more important factors.  According to Hofmeister, demand levels in the United States, for example, have returned to 2007 levels, whilst those in China and India have increased substantially beyond their 2007 levels. So to my original point!  If people perceive that the price a gasoline makes driving too expensive, they will engage in a variety of alternative behaviors, i.e. dump the SUV or pick-up for a more fuel efficient vehicle, drive less; and support more and better public transport options, including passenger rail.  Yes, most of them don't understand the economics of public transport or how to calculate the net present value of buying a new, more fuel efficient vehicle, but if they perceive there are better alternatives, that is their reality.  And $4.00+ per gallon is likely to be a game changer.  Advocates of passenger rail should not overlook the opportunities it would present for broader community support.
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