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How is demand for natural gas determined across European industrial sectors?

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  • Andersen, Trude Berg
  • Nilsen, Odd Bjarte
  • Tveteras, Ragnar

Abstract

This paper estimates the response of manufacturing sectors' natural gas demand to price and output changes. The average response to future changes in absolute and relative prices of the manufacturing industry in an OECD country depends on the mix of manufacturing industries, particularly with respect to energy intensity and substitution opportunities in production. We estimate short and long run demand elasticities using a shrinkage estimator, which allows heterogeneous demand responses across industries for each country. Our results show that price and output elasticities are heterogeneous within the same manufacturing sector across countries. Furthermore, an output contraction due to e.g. demand shocks will generally have larger negative effects on gas demand than increases in natural gas prices.

Suggested Citation

  • Andersen, Trude Berg & Nilsen, Odd Bjarte & Tveteras, Ragnar, 2011. "How is demand for natural gas determined across European industrial sectors?," Energy Policy, Elsevier, vol. 39(9), pages 5499-5508, September.
  • Handle: RePEc:eee:enepol:v:39:y:2011:i:9:p:5499-5508
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    References listed on IDEAS

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    Cited by:

    1. Wang, Ting & Lin, Boqiang, 2014. "China's natural gas consumption and subsidies—From a sector perspective," Energy Policy, Elsevier, vol. 65(C), pages 541-551.
    2. Ackah, Ishmael, 2015. "Accounting for the effect of exogenous non-Economic variables on natural gas demand in oil producing African countries," MPRA Paper 81553, University Library of Munich, Germany.
    3. Zhou, Sheng & Kyle, G. Page & Yu, Sha & Clarke, Leon E. & Eom, Jiyong & Luckow, Patrick & Chaturvedi, Vaibhav & Zhang, Xiliang & Edmonds, James A., 2013. "Energy use and CO2 emissions of China's industrial sector from a global perspective," Energy Policy, Elsevier, vol. 58(C), pages 284-294.
    4. Burke, Paul J. & Yang, Hewen, 2016. "The price and income elasticities of natural gas demand: International evidence," Energy Economics, Elsevier, vol. 59(C), pages 466-474.
    5. Kristine Grimsrud, Knut Einar Rosendahl, Halvor B. Storrøsten, and Marina Tsygankova, 2016. "Short Run Effects of Bleaker Prospects for Oligopolistic Producers of a Non-renewable Resource," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    6. repec:eee:enepol:v:113:y:2018:i:c:p:332-341 is not listed on IDEAS
    7. Gonzales Palomino, Raul & Nebra, Silvia A., 2012. "The potential of natural gas use including cogeneration in large-sized industry and commercial sector in Peru," Energy Policy, Elsevier, vol. 50(C), pages 192-206.
    8. repec:eee:eneeco:v:69:y:2018:i:c:p:379-394 is not listed on IDEAS
    9. Lotfali Agheli, 2016. "Demand for Natural Gas in Food and Beverage Industries of Iran," International Journal of Energy Economics and Policy, Econjournals, vol. 6(3), pages 588-593.
    10. repec:eee:juipol:v:45:y:2017:i:c:p:45-60 is not listed on IDEAS

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    Keywords

    Natural gas Manufacturing Demand;

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