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A simple model of global fuel consumption

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  • Bilgin, Doga
  • Ellwanger, Reinhard

Abstract

We present an SVAR model of the global oil market that utilizes information on global oil consumption in the form of fuels. Under mild identifying assumptions, data on global fuel consumption provides comparatively sharp insights into structural parameters of the global oil market. The estimated short-run global fuel demand elasticity with respect to crude oil prices is around −2%, which is considerably more inelastic than estimates of local fuel demand elasticities based on disaggregated data. Our framework provides new evidence on the drivers of oil-market dynamics and on the effects of climate change policies that act through the price of oil.

Suggested Citation

  • Bilgin, Doga & Ellwanger, Reinhard, 2024. "A simple model of global fuel consumption," Energy Economics, Elsevier, vol. 130(C).
    • Handle: RePEc:eee:eneeco:v:130:y:2024:i:c:s0140988323007521
    DOI: 10.1016/j.eneco.2023.107254
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    More about this item

    Keywords

    Oil price shocks; Oil demand; Oil supply; Elasticities; Structural modeling; Oil prices and macroeconomic fluctuations;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels

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