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Demand for Energy and the Revenue Impact of Changes in Energy Prices

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  • REHANA SIDDIQUI

    (Pakistan Institute of Development Economics, Islamabad.)

Abstract

Energy sector is considered an important source of revenue generation for the government. However, given the price elastic energy demand structure, the revenue generating potential of this sector may be limited. This study examines this issue by analyzing the demand for different sources of energy for domestic, commercial, industrial and other users. The results show that energy demand is, in general, price elastic. Similarly, the changes in income also affect energy demand significantly. This responsiveness of the energy demand to changes in prices (own and others) and to economic conditions in the country can affect the revenue generation from this sector. In Pakistan, given the existing economic conditions and the energy price structure, the actual revenue generation may be significantly lower then expected revenue. Furthermore, the rise in energy price may not be desirable due to its impact on inflation, income distribution, economic competitiveness, environment, and on other social conditions unless it leads to energy conservation in the country.

Suggested Citation

  • Rehana Siddiqui, 1999. "Demand for Energy and the Revenue Impact of Changes in Energy Prices," PIDE-Working Papers 1999:174, Pakistan Institute of Development Economics.
    • Handle: RePEc:pid:wpaper:1999:174
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    File URL: https://www.pide.org.pk/Research/Report174.pdf
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    References listed on IDEAS

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    1. Sweeney, James L., 1979. "Effects of Federal policies on gasoline consumption," Resources and Energy, Elsevier, vol. 2(1), pages 3-26, September.
    2. Peter Pintz, 1986. "Demand-side Energy Policy as an Alternative Energy Strategy for Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 25(4), pages 631-647.
    3. Helliwell, John F. & Cox, Alan J., 1979. "Electricity pricing and electricity supply : The influence of utility pricing on electricity production by pulp and paper mills," Resources and Energy, Elsevier, vol. 2(1), pages 51-74, September.
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    Cited by:

    1. Muhammad Arshad Khan & Usman Ahmad, 2008. "Energy Demand in Pakistan: A Disaggregate Analysis," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 47(4), pages 437-455.
    2. Nadeem Ul Haque & Musleh-ud Din & Lubna Hasan, 2007. "Research at PIDE: Key Messages," PIDE Books, Pakistan Institute of Development Economics, number 2007:2, December.
    3. Rehana Siddiqui, 2004. "Energy and Economic Growth in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 43(2), pages 175-200.
    4. Ghulam Samad & Naseem Faraz & Haroon S. Awan, 2022. "Tariff differential subsidy (TDS) effects and welfare gains in Pakistan," Indian Economic Review, Springer, vol. 57(2), pages 373-392, December.
    5. Khan, Muhammad Arshad & Abbas, Faisal, 2016. "The dynamics of electricity demand in Pakistan: A panel cointegration analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 65(C), pages 1159-1178.
    6. Shamaila Aziz & Muhammad Rizwan Yaseen & Sofia Anwar, 2016. "Impact of Rising Energy Prices on Consumer’s Welfare: A Case Study of Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 55(4), pages 605-618.
    7. Muhammad Atta-ul-Islam Abrar & Muhsin Ali & Uzma Bashir & Karim Khan, 2019. "Energy Pricing Policies and Consumers’ Welfare: Evidence from Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 24(1), pages 1-28, Jan-June.
    8. Muhammad Saad Moeen & Muhammad Asjad Tariq & Saqib Shahzad & Shehryar Rashid, 2016. "Factors Influencing Choice of Energy Sources in Rural Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 55(4), pages 905-920.
    9. Malik, Afia, 2019. "Dynamics and Determinants of Energy Intensity: Evidence from Pakistan," MPRA Paper 103456, University Library of Munich, Germany.
    10. Haroon S. Awan & Ghulam Samad & Naseem Faraz, 2019. "Electricity Subsidies and Welfare Analysis: The Perspective of Pakistan," PIDE-Working Papers 2019:164, Pakistan Institute of Development Economics.
    11. Theresa Chaudhry, 2010. "Estimating Residential Electricity Demand Responses in Pakistan’s Punjab," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 15(Special E), pages 107-138, September.
    12. Muhammad Arshad Khan & Abdul Qayyum, 2009. "The demand for electricity in Pakistan," OPEC Energy Review, Organization of the Petroleum Exporting Countries, vol. 33(1), pages 70-96, March.

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