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

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

Research output: Contribution to journalArticlepeer-review

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 languageEnglish
Article number101318
JournalUtilities Policy
Volume74
DOIs
StatePublished - Feb 2022

Keywords

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

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