Modelling demand for liquefied petroleum gas (LPG) in Ghana: current dynamics and forecast

Abstract

Gas is fast becoming an integral component of the energy mix in Ghana and holds huge prospects for the future. However, there is still great uncertainty surrounding the size of this potential market and often results in supply shortfalls. The recurrent shortages in the supply of liquefied petroleum gas (LPG) for domestic and industrial consumption pose a great challenge to the goal of promoting access and utilisation of modern and efficient energy to engender sustainable development in Ghana. As a result, this paper investigates the long‐ and short‐run demand drivers of LPG in Ghana and presents a 10‐year forecast of future trends in the demand using the autoregressive distributed lag and partial adjustment model techniques. Results identify income, price and urbanisation as the main drivers of demand. Projections from all three scenarios reveal that demand for LPG will reach a minimum of 5.9 million metric tons by the year 2022. This result has serious implications on both demand and supply side management, and thus calls for stringent efforts to attract the requisite infrastructure to ensure stable and reliable supply of LPG to meet domestic and industrial demands.

An empirical analysis of household energy choice in Ghana

“…Unlike other fuel types which are relatively easier to obtain in the market (both urban and rural); access to LPG is often a challenge, as shortages in supply has become rampant over the years. The recurrent shortages have been largely attributed to increasing demand for the gas coupled with low level of infrastructure to boost supply to meet the growing demand [32]. This inherent uncertainty in the supply of LPG poses a great challenge to households who rely on it for cooking, thereby creating disincentives for households to switch entirely from firewood and charcoal towards LPG [32].…”

“…The recurrent shortages have been largely attributed to increasing demand for the gas coupled with low level of infrastructure to boost supply to meet the growing demand [32]. This inherent uncertainty in the supply of LPG poses a great challenge to households who rely on it for cooking, thereby creating disincentives for households to switch entirely from firewood and charcoal towards LPG [32]. Results from our models confirm the above notion, as having access to reliable supply of LPG boost the probability of households adopting LPG as a main cooking fuel by 0.3% to 0.4%, whiles reducing the probability of using fuelwood and other solids fuels by approximately 0.5% and 0.002% respectively.…”

Factors that drive energy use in Africa: panel data evidence from selected Sub‐Sahara African countries

“…Mensah () explored the modelling of demand for LPG in Ghana using two techniques. Specifically, Mensah () stated that the use of the ARDL and PAM (Partial Adjustment Model) techniques in his study serve the purpose of identifying the best model to be used for a 10‐year forecast of the fuel.…”

“…Mensah () explored the modelling of demand for LPG in Ghana using two techniques. Specifically, Mensah () stated that the use of the ARDL and PAM (Partial Adjustment Model) techniques in his study serve the purpose of identifying the best model to be used for a 10‐year forecast of the fuel. The quarterly time series data used in both models, between 1992 and 2012, show that income, price and urbanisation are the main determinants of natural gas demand in Ghana in the long run.…”

Corrigendum

“…The article ‘Modelling demand for liquefied petroleum gas (LPG) in Ghana: current dynamics and forecast’ was published in OPEC Energy Review , Volume 38, Issue 4 (Mensah, ). There is an error on page 410 of the article (third sentence of second paragraph).…”