The price and income elasticities of natural gas demand: International evidence

Burke, Paul J.; Yang, Hewen

doi:10.1016/j.eneco.2016.08.025

Cited by 89 publications

(41 citation statements)

References 52 publications

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“…Payne et al (2011), for example, obtain a short-run price elasticity of natural gas demand in the USA of − 0.19 and a long-run price elasticity of − 0.26, similar to the short-run estimate of − 0.20 and long-run estimate of − 0.28 for natural gas demand in the United Kingdom's (UK's) manufacturing sector obtained by Steinbuks (2012). Burke and Yang (2016) Fig. 3 Spatial distribution of the change in price elasticity of demand for China's natural gas between early period (1999)(2000)(2001)(2002)(2003)(2004)(2005)(2006)(2007)(2008)(2009)) and late period (2010)(2011)(2012)(2013)(2014)(2015) natural gas market and fully explains why natural gas price reform in China must be accelerated.…”

Section: Reconciling the Estimates With Prior Studiessupporting

confidence: 69%

“…In addition, a similar conclusion (i.e., natural gas demand is price inelastic) is obtained in some existing works, such as Dagher (2012) for Colorado, Bilgili (2014) for eight OECD countries, and Zhang et al (2018) for China. With regard to the income elasticity of natural gas demand, many studies estimate that the income elasticity is not greater than 1 even in the long run; in other words, natural gas demand is income inelastic (see Asche et al (2008) for 12 European countries, Yoo et al (2009) for South Korea, Bernstein and Madlener (2011) for 12 OECD countries, Yu et al (2014) for China, and Burke and Yang (2016) for 44 countries). However, as shown in Fig.…”

Section: Reconciling the Estimates With Prior Studiesmentioning

confidence: 99%

“…Sun and Ouyang (2016) estimate the price and expenditure elasticities of residential natural gas demand in China using household-level data from China's Residential Energy Consumption Survey (CRECS). Likewise, using cross-sectional data covering 44 countries, Burke and Yang (2016) obtain estimates of price and income elasticities of natural gas demand. In addition, panel data are used to estimate the price and income elasticities of natural gas demand in other studies, such as Asche et al (2008) for 12 European countries, Andersen et al (2011) for 13 Organization for Economic Cooperation and Development (OECD) countries, Bilgili (2014) for 8 OECD countries, and Dilaver et al (2014) for European countries.…”

Section: Introductionmentioning

confidence: 99%

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How did the price and income elasticities of natural gas demand in China evolve from 1999 to 2015? The role of natural gas price reform

Dong

Sun

2019

Pet. Sci.

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As a cleaner, high-efficiency, and low-carbon fuel, natural gas has been an important fuel resource for China. To achieve a substantial increase in natural gas demand, China has sought to reform its natural gas pricing mechanism. Employing a set of unbalanced panel data for China's 30 provinces covering 1999-2015, this study aims to estimate the evolving price and income elasticities of natural gas demand and explore the effect of natural gas price reform in China. For this purpose, a series of econometric techniques allowing for cross-sectional dependence and slope homogeneity is utilized. The results suggest that although natural gas demand in China still lacks negative price elasticity, the phenomenon is improving. Moreover, the estimates suggest that natural gas demand in China is indeed becoming increasingly sensitive to income changes. Our estimates also provide strong evidence in favor of the effect of natural gas price reform on the change in price elasticity as the price elasticity decreases in five of the seven regions. In addition, the results indicate large variations in the change in price and income elasticities of natural gas demand across China's regions. Natural gas demand is becoming more price inelastic in Southwest China and Northwest China, while such demand in North China and East China responds less sensitively to income changes. These findings offer several policy suggestions for the reform of China's natural gas market at the national and regional levels.

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Section: Reconciling the Estimates With Prior Studiessupporting

confidence: 69%

Section: Reconciling the Estimates With Prior Studiesmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

How did the price and income elasticities of natural gas demand in China evolve from 1999 to 2015? The role of natural gas price reform

Dong

Sun

2019

Pet. Sci.

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“…Auffhammer and Rubin (2018) use a large panel from California and usage records from almost 6 million households, finding that the price elasticity falls in the range from -0.23 to -0.17 and varies across seasons and with household income. Burke and Yang (2016) rely on a panel of national-level data from several countries, and find that while gas consumption as a whole is responsive to price, the demand for gas from the residential sector is inelastic in the short run. The estimated short-run price elasticity is -0.13, but this coefficient is statistically insignificant at the conventional levels.…”

Section: Introductionmentioning

confidence: 99%

Estimating Energy Price Elasticities When Salience Is High: Residential Natural Gas Demand in Ukraine

2019

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Despite its importance for policy purposes (including climate policy and the energy transition), evidence about the price elasticity of natural gas demand in the residential sector is very limited and based on inference from situations with modest variation in prices. We focus on a locale and time when price changes were extreme and presumably salient to consumers, namely Ukraine between 2013 and 2017. We exploit the tariff reforms and detailed micro-level household consumption records to estimate the price elasticity of the demand for natural gas. To isolate behavior, attention is restricted to those households that made no structural energy-efficiency upgrades to their homes, and thus kept the stock of gas-using capital fixed. We further examine the short-run elasticity by restricting the sample to a few months before and after the tariff changes. Our results suggest that under extreme price changes, households are capable of reducing consumption, even without installing insulation or making any other structural modifications to their homes. The price elasticity is about-0.16. Wealthier households, people living in multifamily buildings, and heavy users have more inelastic demands. Households reduced consumption even when they received "subsidies," namely lump-sum government assistance, suggesting that when the price signal is sufficiently strong, lump-sum transfers have only a minimal effect on consumption. We also find some evidence that the stronger the salience, the stronger the responsiveness to price, although this effect is modest and may partly overlap with that of income or baseline consumption. Our data also suggest that the consumers with the lowest uptake of energy efficiency improvements might be those who-by necessity or through skills-are the most productive at reducing energy use through behaviors.

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“…Burke and Yang (2016) put the income elasticity for natural gas at about unity, based on a meta-analysis for 44 countries.©International Monetary Fund. Not for Redistribution…”

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confidence: 99%

Mitigation Policies for the Paris Agreement: An Assessment for G20 Countries

Parry¹,

Mylonas²,

Vernon³

2018

IMF Working Papers

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Following submission of greenhouse gas (GHG) mitigation commitments or pledges (by 190 countries) for the 2015 Paris Agreement, policymakers are considering specific actions for their implementation. To help guide policy, it is helpful to have a quantitative framework for understanding: i) the main impacts (on GHGs, fiscal balances, the domestic environment, economic welfare, and distributional incidence) of emissions pricing; ii) trade-offs between pricing and other (commonly used) mitigation instruments; and iii) why/to what extent needed policies and their impacts differ across countries. This paper provides an illustrative sense of this information for G20 member countries (which account for about 80 percent of global emissions) under plausible (though inevitably uncertain) projections for future fuel use and price responsiveness. Quantitative results underscore the generally strong case for (comprehensive) pricing over other instruments, its small net costs or often net benefits (when domestic environmental gains are considered), but also the potentially wide dispersion (and hence inefficiency) in emissions prices implied by countries' mitigation commitments. JEL Classification Numbers: Q48, Q54, Q58, H23

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The price and income elasticities of natural gas demand: International evidence

Cited by 89 publications

References 52 publications

How did the price and income elasticities of natural gas demand in China evolve from 1999 to 2015? The role of natural gas price reform

How did the price and income elasticities of natural gas demand in China evolve from 1999 to 2015? The role of natural gas price reform

Estimating Energy Price Elasticities When Salience Is High: Residential Natural Gas Demand in Ukraine

Mitigation Policies for the Paris Agreement: An Assessment for G20 Countries

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