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How price responsive is industrial demand for natural gas in the United States?

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  • Li, Raymond
  • Woo, Chi-Keung
  • Tishler, Asher
  • Zarnikau, Jay

Abstract

Our panel data analysis of the price responsiveness of industrial demand for natural gas in the United States utilizes five parametric specifications and 10,944 monthly observations for the lower 48 states in 2001–2019 to document statistically significant (p-value ≤ 0.05) static own-price elasticity estimates of −0.027 to −0.062, short-run −0.029 to −0.125, and long-run −0.060 to −0.179. These estimates with relatively small absolute values support the continuation of energy efficiency standards and demand-side-management programs for deep decarbonization. Further, diverse price responsiveness among heterogeneous industrial customers suggests using demand-response programs to efficiently allocate the limited supply available during a natural gas shortage.

Suggested Citation

  • Li, Raymond & Woo, Chi-Keung & Tishler, Asher & Zarnikau, Jay, 2022. "How price responsive is industrial demand for natural gas in the United States?," Utilities Policy, Elsevier, vol. 74(C).
    • Handle: RePEc:eee:juipol:v:74:y:2022:i:c:s095717872100151x
    DOI: 10.1016/j.jup.2021.101318
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    4. Paul Simshauser & Joel Gilmore, 2025. "Policy sequencing: on the electrification of gas loads in Australia’s National Electricity Market," Working Papers EPRG2509, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    5. Cao, K.H. & Qi, H.S. & Li, R. & Woo, C.K. & Tishler, A. & Zarnikau, J., 2023. "An experiment in own-price elasticity estimation for non-residential electricity demand in the U.S," Utilities Policy, Elsevier, vol. 81(C).
    6. Mohammed Jasim M. Al Essa, 2025. "A review on price-driven energy management systems and demand response programs in smart grids," Environment Systems and Decisions, Springer, vol. 45(1), pages 1-22, March.
    7. Simshauser, P. & Gilmore, J., 2025. "Policy Sequencing: On the Electrification of Gas Loads in Australia’s National Electricity Market," Cambridge Working Papers in Economics 2528, Faculty of Economics, University of Cambridge.
    8. Mamkhezri, Jamal, 2025. "Assessing price elasticity in US residential electricity consumption: A comparison of monthly and annual data with recession implications," Energy Policy, Elsevier, vol. 200(C).
    9. Simshauser, Paul & Gilmore, Joel, 2026. "On the electrification of gas loads in Australia's national electricity market," Energy Policy, Elsevier, vol. 208(C).

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