Investigating the impact of fuel price shocks on bicycle sharing usage in Budapest

Zombor Berezvai’s research was supported by the ÚNKP-23-4 New National Excellence Program of the Ministry for Culture and Innovation from the source of the National Research, Development and Innovation Fund Barna Bakó gratefully acknowledges financial support from the Hungarian National Research, Development and Innovation Office (FK-132343 and K-143276) and from the Hungarian Academy of Sciences (MTA) through the Bolyai János Research Fellowship.

Abstract

The creation of sustainable urban communities is contingent upon the establishment of a sustainable, efficient, and fast transportation system. Bicycle sharing systems (BSS) are one of the most sustainable and inclusive ways of transportation in cities. An important question is how to increase BSS ridership and whether it can effectively replace cars in cities, hence contributing to achieving the 11th Sustainable Development Goal and creating sustainable urban communities. This paper aims to contribute to this stream of research by investigating the effect of fuel prices on BSS ridership. We exploit a natural experiment from Budapest, Hungary, where fuel prices were capped between November 15, 2021, and December 6, 2022. Once the price cap was suddenly eliminated, fuel prices increased by around one-third immediately leading to a very substantial and rarely observable one-time price increase. The difference-in-difference regression results indicate a 2–6% increase in BSS ridership after the elimination of the fuel price cap. The geographical pattern of the change shows that BSS usage mainly increased in the outer part of the city; however, some areas observed a decline. The regression results are also reinforced by survey findings. Understanding these dynamics is crucial for effective urban planning and transportation policymaking.