Oil demand and energy security in Asian countries

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

“…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. Furthermore, the price inelasticity for OECD countries indicates that rising oil prices in the future due to oil depletion will not secure the reduction of oil consumption and will result in extreme inflation (Cho et al, 2011). Therefore, despite its decreasing consumption level, oil is still an essential energy source for most OECD countries.…”

“…Income elasticity is higher than price elasticity, but both are inelastic, as they are smaller than one. 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).…”