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Quantifying the impact of exogenous non-economic factors on UK transport oil demand

  • Broadstock, David C.
  • Hunt, Lester C.

This paper attempts to quantify the impact of exogenous non-economic factors on UK transport oil demand (in addition to income, price, and fuel efficiency) by estimating the demand relationship for oil transport for 1960-2007 using the structural time series model. From this, the relative impact on UK transport oil demand from income, price, and efficiency are quantified. Moreover, the relative impact of the non-economic factors is also quantified, based on the premise that the estimated stochastic trend represents behavioural responses to changes in socio-economic factors and changes in lifestyles and attitudes. The estimated elasticities for income, price and efficiency are 0.6, -0.1, and -0.3, respectively, and it is shown that for efficiency and price the overall contribution is relatively small, whereas the contribution from income and non-economic factors is relatively large. This has important implications for policy makers keen to reduce transport oil consumption and associated emissions, but not willing to reduce the trend rate of economic growth. Taxes and improved efficiency only have a limited impact; hence, a major thrust of policy should perhaps be on educating and informing consumers to persuade them to change their lifestyle and attitudes and thus reduce their consumption through the non-economic instruments route.

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File URL: http://www.sciencedirect.com/science/article/B6V2W-4Y0545B-2/2/ce9c71eaa335533ec8f4d67f0cb83420
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Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 38 (2010)
Issue (Month): 3 (March)
Pages: 1559-1565

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Handle: RePEc:eee:enepol:v:38:y:2010:i:3:p:1559-1565
Contact details of provider: Web page: http://www.elsevier.com/locate/enpol

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  1. Lester C. Hunt & Yasushi Ninomiya, 2003. "Unravelling Trends and Seasonality: A Structural Time Series Analysis of Transport Oil Demand in the UK and Japan," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 63-96.
  2. John Dimitropoulos & Lester Hunt & Guy Judge, 2005. "Estimating underlying energy demand trends using UK annual data," Applied Economics Letters, Taylor & Francis Journals, vol. 12(4), pages 239-244.
  3. Daniel J. Graham & Stephen Glaister, 2002. "The Demand for Automobile Fuel: A Survey of Elasticities," Journal of Transport Economics and Policy, London School of Economics and University of Bath, vol. 36(1), pages 1-25, January.
  4. Harvey, Andrew C & Koopman, Siem Jan, 1992. "Diagnostic Checking of Unobserved-Components Time Series Models," Journal of Business & Economic Statistics, American Statistical Association, vol. 10(4), pages 377-89, October.
  5. Pock, Markus, 2010. "Gasoline demand in Europe: New insights," Energy Economics, Elsevier, vol. 32(1), pages 54-62, January.
  6. Lester C Hunt & Guy Judge & Yasushi Ninomiya, 2003. "Modelling Underlying Energy Demand Trends," Surrey Energy Economics Centre (SEEC), School of Economics Discussion Papers (SEEDS) 105, Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey.
  7. Espey, Molly, 1998. "Gasoline demand revisited: an international meta-analysis of elasticities," Energy Economics, Elsevier, vol. 20(3), pages 273-295, June.
  8. Harvey, Andrew, 1997. "Trends, Cycles and Autoregressions," Economic Journal, Royal Economic Society, vol. 107(440), pages 192-201, January.
  9. Chitnis, Mona & Hunt, Lester C., 2012. "What drives the change in UK household energy expenditure and associated CO2 emissions? Implication and forecast to 2020," Applied Energy, Elsevier, vol. 94(C), pages 202-214.
  10. David Bonilla & Timothy Foxon, 2009. "Demand for New Car Fuel Economy in the UK, 1970-2005," Journal of Transport Economics and Policy, London School of Economics and University of Bath, vol. 43(1), pages 55-83, January.
  11. Hunt, L.C. & Judge, G. & Ninomiya, Y., 2000. "Underlying Trends and Seasonality in UK Energy Demands: A Sectorial Analysis," Papers 134, Portsmouth University - Department of Economics.
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