A panel data analysis of the determinants of oil consumption: The case of Australia

Determinants of Oil Demand in OECD Countries: An Application of Panel Data Model

“…As such, a 1% percent increase in GDP per capita level leads to about a 0.72% increase in oil consumption per capita level for the whole EJBE 2015, 8 (15) panel set, while a 1% increase in oil price decreases the demand for oil by 0.16% in the long-run. In the long-run, oil demand is both income and price-inelastic as obtained by many studies in the literature; however, income elasticity is higher than price elasticity (see, among others, Altinay 2007;Narayan and Wong, 2009;Behmiri and Manso, 2012). Based on the panel results, it could be asserted that crude oil demand is highly price-inelastic, indicating that consumers are insensitive to price changes.…”

“…In addition, based on the other studies in the literature (see, among others, (Altinay, 2007;Narayan & Wong 2009;Lee & Lee, 2010) and on the Marshallian theory of demand for goods and services, we use a simple energy demand model consisting of the oil's own price and per capita income level. Though there are many other effective factors on consumer demand, such as taste and consumer preferences, lifestyle, the prices of substitutes and EJBE 2015, 8 (15) complements, and technological innovation, it is difficult to quantify and measure them (Mitchell, 2006).…”

“…As stated by Cho et al (2011), the price inelasticity for OECD countries indicates that a rising oil price in the future due to oil depletion will not reduce oil consumption and result in extreme inflation. Furthermore, as income growth leads to additional oil consumption, economic growth will be accompanied by higher oil consumption, which will put upward pressure on oil prices due to depleting oil reserves; thus, there are likely to be monetary policy implications for rising oil prices (Narayan and Wong 2009). Furthermore, the implementation of pricing policies to curtail energy demand may not be useful, due to the relatively low magnitude of price elasticity.…”

“…The pressure of volatile crude oil prices and environmental issues derived from the substitution of renewable energy sources for fossil-based ones reinforce this trend (Pedregal et al, 2009). In other words, due to recent hikes in oil prices and the search for alternative energy types, modeling determinants of oil consumption has turned out to be a crucial issue (Narayan & Wong 2009). …”

Demand Forecast of Petroleum Product Consumption in the Chinese Transportation Industry

“…Among all the factors, price and income have been found to be the two primary ones. Narayan et al [14] studied oil consumption in Australia using panel data covering from 1985 to 2006 with their conclusions revealed that in the long run the effect of oil price on oil products is not statistically significant, whereas income has an influence on oil production in the opposite direction on oil production. Local oil consumption is not determined by the rising price of oil which indicates the major position oil product consumption has in the production and consumption processes.…”