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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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    References listed on IDEAS

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    Cited by:

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    2. Yuliya I. Bogomolova & Elena V. Belokurova & Vladimir R. Meshkov & Evgeniy O. Pavlov, 2018. "Human Capital of Transnational Corporations in the Energy Sector," International Journal of Energy Economics and Policy, Econjournals, vol. 8(6), pages 128-134.
    3. Jean Gaston Tamba & Salom Ndjakomo Essiane & Emmanuel Flavian Sapnken & Francis Djanna Koffi & Jean Luc Nsouand l & Bozidar Soldo & Donatien Njomo, 2018. "Forecasting Natural Gas: A Literature Survey," International Journal of Energy Economics and Policy, Econjournals, vol. 8(3), pages 216-249.
    4. Atalla, Tarek N. & Gasim, Anwar A. & Hunt, Lester C., 2018. "Gasoline demand, pricing policy, and social welfare in Saudi Arabia: A quantitative analysis," Energy Policy, Elsevier, vol. 114(C), pages 123-133.
    5. Reza Hafezi & Amir Naser Akhavan & Mazdak Zamani & Saeed Pakseresht & Shahaboddin Shamshirband, 2019. "Developing a Data Mining Based Model to Extract Predictor Factors in Energy Systems: Application of Global Natural Gas Demand," Energies, MDPI, vol. 12(21), pages 1-22, October.
    6. 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.
    7. Markéta Mikolajková-Alifov & Frank Pettersson & Margareta Björklund-Sänkiaho & Henrik Saxén, 2019. "A Model of Optimal Gas Supply to a Set of Distributed Consumers," Energies, MDPI, vol. 12(3), pages 1-27, January.
    8. Girma T. Chala & Abd Rashid Abd Aziz & Ftwi Y. Hagos, 2018. "Natural Gas Engine Technologies: Challenges and Energy Sustainability Issue," Energies, MDPI, vol. 11(11), pages 1-44, October.
    9. 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.
    10. Maxime Cachia & Hervé Carrier & Brice Bouyssiere & Philippe Le Coustumer & Pierre Chiquet & Guilhem Caumette & Isabelle Le Hécho, 2019. "Solid Particles in Natural Gas from a Transportation Network: A Chemical Composition Study," Energies, MDPI, vol. 12(20), pages 1-8, October.
    11. 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.
    12. Atalla, Tarek N. & Hunt, Lester C., 2016. "Modelling residential electricity demand in the GCC countries," Energy Economics, Elsevier, vol. 59(C), pages 149-158.

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    Keywords

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    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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