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What Drives Natural Gas Consumption in Europe? Analysis and Projections

Author

Listed:
  • Özge Dilaver

    (Centre for Research in Social Simulation (CRESS), Department of Sociology, University of Surrey, and British Institute at Ankara, Turkey)

  • Zafer Dilaver

    () (The Republic of Turkey Prime Ministry, Ankara, Turkey, and Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey.)

  • Lester C Hunt

    () (Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey.)

Abstract

Natural gas is an important fuel source for Europe and it is expected to remain so in the near future. The market power of suppliers is an important structural element of the European natural gas market and long-term investment and contracts necessitate reliable projections of natural gas demand. This research attempts to address this need. It investigates the impact of income, real natural gas prices and the underlying energy demand trend (UEDT) on OECD-Europe natural gas consumption by applying the structural time series technique to annual data over the period 1978 to 2011. The results suggest that, in order of importance, income, the UEDT and natural gas prices all play a role in driving OECD-Europe natural gas consumption with the estimated UEDT having both increasing (gas using) and decreasing (gas saving) periods over the estimation period and the estimated long run income and price elasticities being 1.19 and -0.16 respectively. Furthermore, based upon the estimated relationship, OECD-Europe natural gas consumption is predicted to be somewhere between 572 and 646 bcm (about 472 and 533 mtoe) by 2020.

Suggested Citation

  • Özge Dilaver & Zafer Dilaver & Lester C Hunt, 2013. "What Drives Natural Gas Consumption in Europe? Analysis and Projections," Surrey Energy Economics Centre (SEEC), School of Economics Discussion Papers (SEEDS) 143, Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey.
  • Handle: RePEc:sur:seedps:143
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    File URL: http://www.seec.surrey.ac.uk/Research/SEEDS/SEEDS143.pdf
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    References listed on IDEAS

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    1. Robert S. Pindyck, 1979. "The Structure of World Energy Demand," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661772.
    2. Frank Asche & Odd Bjarte Nilsen & Ragnar Tveteras, 2008. "Natural Gas Demand in the European Household Sector," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 27-46.
    3. repec:mop:credwp:09.02.82 is not listed on IDEAS
    4. Massol, Olivier & Tchung-Ming, Stéphane, 2010. "Cooperation among liquefied natural gas suppliers: Is rationalization the sole objective?," Energy Economics, Elsevier, vol. 32(4), pages 933-947, July.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. repec:eco:journ2:2018-06-16 is not listed on IDEAS
    2. repec:eco:journ2:2018-03-28 is not listed on IDEAS
    3. 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.
    4. repec:gam:jeners:v:11:y:2018:i:11:p:2934-:d:178675 is not listed on IDEAS
    5. Yakubu Abdul-Salam, 2019. "Evaluating the Impact of Brexit on Natural Gas Trade between the UK and the EU – A Spatial Equilibrium Analysis," CEERP Working Paper Series 008, Centre for Energy Economics Research and Policy, Heriot-Watt University.
    6. repec:gam:jeners:v:12:y:2019:i:3:p:351-:d:200186 is not listed on IDEAS
    7. 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.

    More about this item

    Keywords

    OECD-Europe Gas Demand; Structural Time Series Model (STSM); Gas Demand Modelling and Future Scenarios.;

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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