EconPapers    
Economics at your fingertips  
 

Price responsiveness of commercial demand for natural gas in the US

Raymond Li, Chi-Keung Woo, Asher Tishler and Jay Zarnikau (jayz@utexas.edu)

Energy, 2022, vol. 256, issue C

Abstract: To estimate price responsiveness of commercial demand for natural gas in the US, we use five parametric specifications to conduct panel data analysis of a newly developed sample of 17,280 monthly observations for the lower 48 states in 1991–2020. We find that the US commercial natural gas demand is price inelastic, with statistically significant (p-value ≤ 0.05) static own-price elasticity estimates of −0.137 to −0.245, short-run −0.152 to −0.261 and long-run −0.281 to −0.463. These estimates vary by choice of a sample period, choice of a parametric specification, treatment of cross-section dependence, assumption of partial adjustment, and exclusion of fixed effects. Further, they vary by season and region and their size has been slowly declining over time. Finally, commercial natural gas shortage cost declines with the size of own-price elasticity estimates. The policy implications of these findings are: (a) price-induced conservation's likely limited effect on the US commercial natural gas demand justifies continuation of energy efficiency standards and demand-side-management programs for deep decarbonization; and (b) demand response programs such as real time pricing and reliability differentiation efficiently allocate limited supply of natural gas during a shortage among heterogenous end-users, thus reducing an economy's aggregate natural gas shortage cost.

Keywords: Commercial natural gas demand; Price elasticity; Cross-section dependence; Panel data analysis; United States (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0360544222015134
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:256:y:2022:i:c:s0360544222015134

DOI: 10.1016/j.energy.2022.124610

Access Statistics for this article

Energy is currently edited by Henrik Lund and Mark J. Kaiser

More articles in Energy from Elsevier
Bibliographic data for series maintained by Catherine Liu (repec@elsevier.com).

 
Page updated 2025-02-08
Handle: RePEc:eee:energy:v:256:y:2022:i:c:s0360544222015134