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

Canberra School of Politics, Economics and Society

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

7 Citations (Scopus)

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
Pages (from-to)	1-14
Number of pages	14
Journal	Utilities Policy
Volume	74
DOIs	https://doi.org/10.1016/j.jup.2021.101318
Publication status	Published - Feb 2022

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10.1016/j.jup.2021.101318

Cite this

@article{37e45108f3ed42b4b88a1676403b64e1,

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 Chi-Keung Woo and Asher Tishler and Jay Zarnikau",

note = "Funding Information: This paper extends C.K. Woo's research funded by Grant R3698 from the Education University of Hong Kong and Grant 04564 from the same university's Faculty of Liberal Arts & Social Sciences. We thank the editor and three diligent reviewers for their detailed and helpful comments that have greatly improved the paper's content and exposition. Without implications, all errors are ours. Publisher Copyright: {\textcopyright} 2021 Elsevier Ltd",

year = "2022",

month = feb,

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

language = "English",

volume = "74",

pages = "1--14",

journal = "Utilities Policy",