Price Responsiveness of Residential Demand for Natural Gas in the United States
While price responsiveness of residential demand for natural gas has important implications on resource planning and energy modelling, its estimates from prior studies are very diverse. Applying panel data analysis and five parametric specifications to monthly data for the lower 48 states in 1990–20...
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| Format: | Article |
| Language: | English |
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MDPI AG
2022-06-01
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| Series: | Energies |
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| Online Access: | https://www.mdpi.com/1996-1073/15/12/4231 |
| _version_ | 1797487911307837440 |
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| author | Raymond Li Chi-Keung Woo Asher Tishler Jay Zarnikau |
| author_facet | Raymond Li Chi-Keung Woo Asher Tishler Jay Zarnikau |
| author_sort | Raymond Li |
| collection | DOAJ |
| description | While price responsiveness of residential demand for natural gas has important implications on resource planning and energy modelling, its estimates from prior studies are very diverse. Applying panel data analysis and five parametric specifications to monthly data for the lower 48 states in 1990–2019, we estimate own-price elasticities of residential demand for natural gas in the United States (US). Using results from cross-section dependence (CD) test, panel unit root tests, panel time-series estimators, and rolling-window analysis, we document: (1) the statistically significant (<i>p</i>-value ≤ 0.05) static own-price elasticity estimates are −0.271 to −0.486, short-run −0.238 to −0.555 and long-run −0.323 to −0.796; (2) these estimates vary by elasticity type, sample period, parametric specification, treatment of CD and assumption of partial adjustment; (3) erroneously ignoring the highly significant (<i>p</i>-value < 0.01) CD shrinks the size of these estimates that vary seasonally, regionally, and nonlinearly over time; and (4) residential natural gas shortage costs decline with the size of own-price elasticity estimates. These findings suggest that achieving deep decarbonization may require strategies that do not rely solely on prices, such as energy efficiency standards and demand-side-management programs. Demand response programs may prove useful for managing natural gas shortages. |
| first_indexed | 2024-03-09T23:54:35Z |
| format | Article |
| id | doaj.art-75b980edd2ef4b52835d7b9e66ef9f0f |
| institution | Directory Open Access Journal |
| issn | 1996-1073 |
| language | English |
| last_indexed | 2024-03-09T23:54:35Z |
| publishDate | 2022-06-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Energies |
| spelling | doaj.art-75b980edd2ef4b52835d7b9e66ef9f0f2023-11-23T16:27:45ZengMDPI AGEnergies1996-10732022-06-011512423110.3390/en15124231Price Responsiveness of Residential Demand for Natural Gas in the United StatesRaymond Li0Chi-Keung Woo1Asher Tishler2Jay Zarnikau3Faculty of Business, Government & Law, University of Canberra, Bruce 2617, AustraliaDepartment of Asian and Policy Studies, The Education University of Hong Kong, Hong Kong, ChinaColler School of Management, Tel Aviv University, Tel Aviv 6997801, IsraelDepartment of Economics, University of Texas at Austin, Austin, TX 78712, USAWhile price responsiveness of residential demand for natural gas has important implications on resource planning and energy modelling, its estimates from prior studies are very diverse. Applying panel data analysis and five parametric specifications to monthly data for the lower 48 states in 1990–2019, we estimate own-price elasticities of residential demand for natural gas in the United States (US). Using results from cross-section dependence (CD) test, panel unit root tests, panel time-series estimators, and rolling-window analysis, we document: (1) the statistically significant (<i>p</i>-value ≤ 0.05) static own-price elasticity estimates are −0.271 to −0.486, short-run −0.238 to −0.555 and long-run −0.323 to −0.796; (2) these estimates vary by elasticity type, sample period, parametric specification, treatment of CD and assumption of partial adjustment; (3) erroneously ignoring the highly significant (<i>p</i>-value < 0.01) CD shrinks the size of these estimates that vary seasonally, regionally, and nonlinearly over time; and (4) residential natural gas shortage costs decline with the size of own-price elasticity estimates. These findings suggest that achieving deep decarbonization may require strategies that do not rely solely on prices, such as energy efficiency standards and demand-side-management programs. Demand response programs may prove useful for managing natural gas shortages.https://www.mdpi.com/1996-1073/15/12/4231residential natural gas demandprice elasticitycross-section dependencepanel data analysis |
| spellingShingle | Raymond Li Chi-Keung Woo Asher Tishler Jay Zarnikau Price Responsiveness of Residential Demand for Natural Gas in the United States Energies residential natural gas demand price elasticity cross-section dependence panel data analysis |
| title | Price Responsiveness of Residential Demand for Natural Gas in the United States |
| title_full | Price Responsiveness of Residential Demand for Natural Gas in the United States |
| title_fullStr | Price Responsiveness of Residential Demand for Natural Gas in the United States |
| title_full_unstemmed | Price Responsiveness of Residential Demand for Natural Gas in the United States |
| title_short | Price Responsiveness of Residential Demand for Natural Gas in the United States |
| title_sort | price responsiveness of residential demand for natural gas in the united states |
| topic | residential natural gas demand price elasticity cross-section dependence panel data analysis |
| url | https://www.mdpi.com/1996-1073/15/12/4231 |
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