The Dynamic of Residential Energy Demand Function: Evidence from Natural Gas

Abstract

This analysis uses annual data on residential gas use for 29 Organization for Economic Cooperation and Development nations from 2005 to 2016 to look at per capita energy demand. The effect of price and income on natural gas demand elasticities has been studied in the past, but most research have ignored demographic aspects. The goal of this study is to incorporate these characteristics into natural gas demand modeling. A dynamic panel system dubbed the Generalized Method of Moments (GMM) estimator was used to address the endogeneity issue. The following are the study’s main findings: First, the residential sector consumes more natural gas per capita as the population grows. Second, the consumption of per capita residential natural gas in Organization for Economic Cooperation and Development countries is decreasing as the population ages. Finally, as the population density rises, so does per capita gas consumption.