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What Drives Natural Gas Consumption in Europe? Analysis and Projections

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Author Info

  • Özge Dilaver

    (Centre for Research in Social Simulation (CRESS), Department of Sociology, University of Surrey, and British Institute at Ankara, Turkey)

  • Zafer Dilaver

    ()
    (The Republic of Turkey Prime Ministry, Ankara, Turkey, and Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey.)

  • Lester C. Hunt

    ()
    (Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey.)

Abstract

Natural gas is an important fuel source for Europe and it is expected to remain so in the near future. The market power of suppliers is an important structural element of the European natural gas market and long-term investment and contracts necessitate reliable projections of natural gas demand. This research attempts to address this need. It investigates the impact of income, real natural gas prices and the underlying energy demand trend (UEDT) on OECD-Europe natural gas consumption by applying the structural time series technique to annual data over the period 1978 to 2011. The results suggest that, in order of importance, income, the UEDT and natural gas prices all play a role in driving OECD-Europe natural gas consumption with the estimated UEDT having both increasing (gas using) and decreasing (gas saving) periods over the estimation period and the estimated long run income and price elasticities being 1.19 and -0.16 respectively. Furthermore, based upon the estimated relationship, OECD-Europe natural gas consumption is predicted to be somewhere between 572 and 646 bcm (about 472 and 533 mtoe) by 2020.

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Bibliographic Info

Paper provided by Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey in its series Surrey Energy Economics Centre (SEEC), School of Economics Discussion Papers (SEEDS) with number 143.

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Length: 36 pages
Date of creation: Oct 2013
Date of revision:
Publication status: Published in Journal of Natural Gas Science and Engineering 19, 2014, pp. 125–136. (Revised Version)
Handle: RePEc:sur:seedps:143

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Related research

Keywords: OECD-Europe Gas Demand; Structural Time Series Model (STSM); Gas Demand Modelling and Future Scenarios.;

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References

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  1. Robert S. Pindyck, 1979. "The Structure of World Energy Demand," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661772, December.
  2. repec:mop:credwp:09.02.82 is not listed on IDEAS
  3. Massol, Olivier & Tchung-Ming, Stéphane, 2010. "Cooperation among liquefied natural gas suppliers: Is rationalization the sole objective?," Energy Economics, Elsevier, vol. 32(4), pages 933-947, July.
  4. Frank Asche & Odd Bjarte Nilsen & Ragnar Tveteras, 2008. "Natural Gas Demand in the European Household Sector," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 27-46.
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