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

Raymond Li; Chi Keung Woo; Asher Tishler; Jay Zarnikau

doi:10.1016/j.jup.2021.101318

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

Raymond Li, Chi Keung Woo, Asher Tishler, Jay Zarnikau^*

^*Corresponding author for this work

Coller School of Management

Research output: Contribution to journal › Article › peer-review

7 Scopus citations

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.

Original language	English
Article number	101318
Journal	Utilities Policy
Volume	74
DOIs	https://doi.org/10.1016/j.jup.2021.101318
State	Published - Feb 2022

Funding

Funders	Funder number
Faculty of Liberal Arts & Social Sciences
Education University of Hong Kong	04564

Keywords

Cross-section dependence
Industrial natural gas demand
Panel data analysis
Price elasticity
United States

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

Access to Document

10.1016/j.jup.2021.101318

Cite this

@article{8c84026f319343dc8a5c1b9f8ea49ccf,

title = "How price responsive is industrial demand for natural gas in the United States?",

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.",

keywords = "Cross-section dependence, Industrial natural gas demand, Panel data analysis, Price elasticity, United States",

author = "Raymond Li and Woo, {Chi Keung} and Asher Tishler and Jay Zarnikau",

note = "Publisher Copyright: {\textcopyright} 2021 Elsevier Ltd",

year = "2022",

month = feb,

doi = "10.1016/j.jup.2021.101318",

language = "אנגלית",

volume = "74",

journal = "Utilities Policy",