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Modelling demand for liquefied petroleum gas (LPG) in Ghana: current dynamics and forecast

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  • Justice Tei Mensah

Abstract

Gas is fast becoming an integral component of the energy mix in Ghana and holds huge prospects for the future. However, there is still great uncertainty surrounding the size of this potential market and often results in supply shortfalls. The recurrent shortages in the supply of liquefied petroleum gas (LPG) for domestic and industrial consumption pose a great challenge to the goal of promoting access and utilisation of modern and efficient energy to engender sustainable development in Ghana. As a result, this paper investigates the long- and short-run demand drivers of LPG in Ghana and presents a 10-year forecast of future trends in the demand using the autoregressive distributed lag and partial adjustment model techniques. Results identify income, price and urbanisation as the main drivers of demand. Projections from all three scenarios reveal that demand for LPG will reach a minimum of 5.9 million metric tons by the year 2022. This result has serious implications on both demand and supply side management, and thus calls for stringent efforts to attract the requisite infrastructure to ensure stable and reliable supply of LPG to meet domestic and industrial demands.

Suggested Citation

  • Justice Tei Mensah, 2014. "Modelling demand for liquefied petroleum gas (LPG) in Ghana: current dynamics and forecast," OPEC Energy Review, Organization of the Petroleum Exporting Countries, vol. 38(4), pages 398-423, December.
    • Handle: RePEc:bla:opecrv:v:38:y:2014:i:4:p:398-423
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    File URL: http://hdl.handle.net/10.1111/opec.12032
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    Cited by:

    1. Adom, Philip Kofi & Amakye, Kwaku & Barnor, Charles & Quartey, George & Bekoe, William, 2016. "Shift in demand elasticities, road energy forecast and the persistence profile of shocks," Economic Modelling, Elsevier, vol. 55(C), pages 189-206.
    2. Mensah, Justice Tei & Marbuah, George & Amoah, Anthony, 2016. "Energy demand in Ghana: A disaggregated analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 53(C), pages 924-935.
    3. Eric Fosu Oteng-Abayie & Prosper Awuni Ayinbilla & Maame Esi Eshun, 2018. "Macroeconomic Determinants of Crude Oil Demand in Ghana," Global Business Review, International Management Institute, vol. 19(4), pages 873-888, August.
    4. Mensah, Justice Tei & Adu, George, 2015. "An empirical analysis of household energy choice in Ghana," Renewable and Sustainable Energy Reviews, Elsevier, vol. 51(C), pages 1402-1411.
    5. Aisha Kolawole & Sola Adesola & Glauco De Vita, 2017. "A Disaggregated Analysis of Energy Demand in Sub-Saharan Africa," International Journal of Energy Economics and Policy, Econjournals, vol. 7(2), pages 224-235.

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