Journal
UTILITIES POLICY
Volume 74, Issue -, Pages -Publisher
ELSEVIER SCI LTD
DOI: 10.1016/j.jup.2021.101318
Keywords
Industrial natural gas demand; Price elasticity; Panel data analysis; Cross-section dependence; United States
Funding
- Education University of Hong Kong Faculty of Liberal Arts & Social Sciences [04564]
- Education University of Hong Kong [R3698]
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The panel data analysis shows that industrial demand for natural gas in the United States has relatively small price elasticities, supporting the continuation of energy efficiency standards and demand-side management programs. Different price responsiveness among industrial customers suggests using demand response programs to efficiently allocate limited supply during natural gas shortages.
Our panel data analysis of the price responsiveness of industrial demand for natural gas in the United States utilizes five parametric specifications and 10,944 monthly observations for the lower 48 states in 2001-2019 to document statistically significant (p-value < 0.05) static own-price elasticity estimates of -0.027 to -0.062, short-run -0.029 to -0.125, and long-run -0.060 to -0.179. These estimates with relatively small absolute values support the continuation of energy efficiency standards and demand-side-management programs for deep decarbonization. Further, diverse price responsiveness among heterogeneous industrial customers suggests using demand-response programs to efficiently allocate the limited supply available during a natural gas shortage.
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