Overview of Committed Quantities in Commodity Demand Analysis with a Focus on Energy

Abstract

An overview of the literature considering committed quantities in demand estimation for various commodities with an emphasis on energy commodities is presented. This overview provides a definition and the history of committed quantities, along with different theoretical modeling methodologies. Committed quantities are quantities that are consumed in the short run with little regard for price. Previous studies suggest that committed quantities for various commodities range from 15 to 98% of consumption. The inclusion of committed quantities appears to improve estimates generally, but it is not clear-cut. Problems arise when estimated committed quantities are negative or larger than the consumption amount. This review concludes with a recommendation that further research is necessary to resolve such issues, provide an improved understanding of the committed quantities in estimation, and fill in knowledge gaps concerning committed quantities ranging from theoretical to practical issues.