Multiple Determinants of Household Natural Gas Demand: A Panel Data Analysis in OECD Countries

Abstract

This paper examines the determinants of household natural gas demand in 18 selected OECD countries over the period 2004 to 2015. Household natural gas demand is specified as a function of its own price, income, population and climate. The long-term price and income elasticities of natural gas demand were estimated pooled data regressions. The results provide evidence that natural gas prices, per capita GDP, population and climate are significant factors in explaining household natural gas demand. More specifically, population is found to be the most influential factor on household natural gas demand. The results indicate that natural gas demand has negative and positive price and income elasticities, respectively. Also, both price and income are inelastic in the long-term. Contribution/ Originality: This study contributes to the current literature with a multivariate approach. Natural gas that demanded in the household sector is analyzed for OECD countries with a multivariate approach. In addition, new data sets are used in this study. The analysis is carried out with advanced econometric methods. The price and income elasticities of natural gas demand for OECD countries provide beneficial results for energy policy makers.

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