Natural gas demand at the utility level: An application of dynamic elasticities
Previous studies provide strong evidence that energy demand elasticities vary across regions and states, arguing in favor of conducting energy demand studies at the smallest unit of observation for which good quality data are readily available, that is the utility level. We use monthly data from the residential sector of Xcel Energy's service territory in Colorado for the period January 1994 to September 2006. Based on a very general Autoregressive Distributed Lag model this paper uses a new approach to simulate the dynamic behavior of natural gas demand and obtain dynamic elasticities. Knowing consumers' response on a unit time basis enables one to answer a number of questions, such as, the length of time needed to reach demand stability. Responses to price and income were found to be much lower–even in the long run–than has been commonly suggested in the literature. Interestingly, we find that the long run equilibrium is reached relatively quickly, around 18months after a change in price or income has occurred, while the literature implies a much longer period for complete adjustments to take place.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kramer, Walter & Ploberger, Werner & Alt, Raimund, 1988. "Testing for Structural Change in Dynamic Models," Econometrica, Econometric Society, vol. 56(6), pages 1355-69, November.
- Xavier Labandeira & José M. Labeaga & Miguel Rodríguez, 2005.
"A Residential Energy Demand System for Spain,"
0501, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
- Maddala, G S, et al, 1997. "Estimation of Short-Run and Long-Run Elasticities of Energy Demand from Panel Data Using Shrinkage Estimators," Journal of Business & Economic Statistics, American Statistical Association, vol. 15(1), pages 90-100, January.
- A. Greening, Lorna & Greene, David L. & Difiglio, Carmen, 2000. "Energy efficiency and consumption -- the rebound effect -- a survey," Energy Policy, Elsevier, vol. 28(6-7), pages 389-401, June.
- Bentzen, J. & Engsted, T., 1999.
"A Revival of the Autoregressive Distributed Lag Model in Estimating Energy Demand Relationships,"
99-7, Aarhus School of Business - Department of Economics.
- Bentzen, Jan & Engsted, Tom, 2001. "A revival of the autoregressive distributed lag model in estimating energy demand relationships," Energy, Elsevier, vol. 26(1), pages 45-55.
- H. S. Houthakker & Philip K. Verleger & Dennis P. Sheehan, 1974. "Dynamic Demand Analyses for Gasoline and Residential Electricity," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 56(2), pages 412-418.
- Uri, Noel D., 1983. "The regional demand for energy by the residential sector in the United States," Applied Energy, Elsevier, vol. 13(1), pages 23-44, January.
- Peter Kennedy, 2003. "A Guide to Econometrics, 5th Edition," MIT Press Books, The MIT Press, edition 5, volume 1, number 026261183x.
- Koli Fatai & Les Oxley & Frank G. Scrimgeour, 2003. "Modeling and Forecasting the Demand for Electricity in New Zealand: A Comparison of Alternative Approaches," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 75-102.
- Halvorsen, Robert & Palmquist, Raymond, 1980. "The Interpretation of Dummy Variables in Semilogarithmic Equations," American Economic Review, American Economic Association, vol. 70(3), pages 474-75, June.
- Dolado, Juan J & Jenkinson, Tim & Sosvilla-Rivero, Simon, 1990. " Cointegration and Unit Roots," Journal of Economic Surveys, Wiley Blackwell, vol. 4(3), pages 249-73.
- Garcia-Cerrutti, L. Miguel, 2000. "Estimating elasticities of residential energy demand from panel county data using dynamic random variables models with heteroskedastic and correlated error terms," Resource and Energy Economics, Elsevier, vol. 22(4), pages 355-366, October.
- Smith, V. Kerry, 1980. "Estimating the price elasticity of US electricity demand," Energy Economics, Elsevier, vol. 2(2), pages 81-85, April.
- Chern, Wen S. & Just, Richard E., 1980. "Regional analysis of electricity demand growth," Energy, Elsevier, vol. 5(1), pages 35-46.
- Murray, Michael P, et al, 1978. "The Demand for Electricity in Virginia," The Review of Economics and Statistics, MIT Press, vol. 60(4), pages 585-600, November.
- Rushdi, Ali Ahmed, 1986. "Interfuel substitution in the residential sector of South Australia," Energy Economics, Elsevier, vol. 8(3), pages 177-185, July.
- Donald W.K. Andrews, 1990.
"Tests for Parameter Instability and Structural Change with Unknown Change Point,"
Cowles Foundation Discussion Papers
943, Cowles Foundation for Research in Economics, Yale University.
- Andrews, Donald W K, 1993. "Tests for Parameter Instability and Structural Change with Unknown Change Point," Econometrica, Econometric Society, vol. 61(4), pages 821-56, July.
- J. Daniel Khazzoom, 1980. "Economic Implications of Mandated Efficiency in Standards for Household Appliances," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 21-40.
- Espey, James A. & Espey, Molly, 2004.
"Turning on the Lights: A Meta-Analysis of Residential Electricity Demand Elasticities,"
Journal of Agricultural and Applied Economics,
Southern Agricultural Economics Association, vol. 36(01), April.
- Espey, James A. & Espey, Molly, 2004. "Turning on the Lights: A Meta-Analysis of Residential Electricity Demand Elasticities," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 36(01), pages 65-81, April.
- Ernst R. Berndt & G. Campbell Watkins, 1977. "Demand for Natural Gas: Residential and Commercial Markets in Ontario and British Columbia," Canadian Journal of Economics, Canadian Economics Association, vol. 10(1), pages 97-111, February.
- Gehuang D. Nan & Donald A. Murry, 1992. "Energy Demand with the Flexible Double-Logarithmic Functional Form," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 149-160.
When requesting a correction, please mention this item's handle: RePEc:eee:eneeco:v:34:y:2012:i:4:p:961-969. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.