IDEAS home Printed from https://ideas.repec.org/p/sur/seedps/126.html
   My bibliography  Save this paper

Transportation Oil Demand Consumer Preferences and Asymmetric Price Responses: Some UK Evidence

Author

Listed:
  • David C Broadstock

    (Surrey Energy Economics Centre (SEEC), Department of Economics, University of Surrey)

  • Alan Collins

    () (Department of Economics, University of Portsmouth)

  • Lester C Hunt

    (Surrey Energy Economics Centre (SEEC), Department of Economics, University of Surrey)

Abstract

The aim of this paper is to (i) establish the role of asymmetric price decompositions in UK road transportation fuel demand, (ii) make explicit the impact of the underlying energy demand trend and (iii) disaggregate the estimation for gasoline and diesel demand as separate commodities. Dynamic UK transport oil demand functions are estimated using the Seemingly Unrelated Structural Time Series Model with decomposed prices to allow for asymmetric price responses. The importance of starting with a flexible modelling approach that incorporates both an underlying demand trend and asymmetric price response function is highlighted. Furthermore, these features can lead to different insights and policy implications than might arise from a model without them. As an example, a zero elasticity for a price-cut is found (for both gasoline and diesel) implying that price reductions do not induce demand for road transportation fuel in the UK. The paper illustrates the importance of joint modelling of gasoline and diesel demand incorporating both asymmetric price responses and stochastic underlying energy demand trends.

Suggested Citation

  • David C Broadstock & Alan Collins & Lester C Hunt, 2010. "Transportation Oil Demand Consumer Preferences and Asymmetric Price Responses: Some UK Evidence," Surrey Energy Economics Centre (SEEC), School of Economics Discussion Papers (SEEDS) 126, Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey.
  • Handle: RePEc:sur:seedps:126
    as

    Download full text from publisher

    File URL: http://www.seec.surrey.ac.uk/Research/SEEDS/SEEDS126.pdf
    Download Restriction: no

    More about this item

    Keywords

    Diesel; Asymmetry; Price; Underlying Energy Demand Trend (UEDT).;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sur:seedps:126. 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: (Mona Chitnis). General contact details of provider: http://edirc.repec.org/data/eesuruk.html .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.