TY - JOUR
T1 - What drives natural gas consumption in Europe? Analysis and projections
AU - Dilaver, Özge
AU - Dilaver, Zafer
AU - Hunt, Lester C.
PY - 2014/7/1
Y1 - 2014/7/1
N2 - 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 533mtoe) by 2020.
AB - 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 533mtoe) by 2020.
KW - energy demand modelling and future scenarios
KW - Europe natural gas demand
KW - structural time series model (STSM)
UR - http://www.scopus.com/inward/record.url?scp=84901349954&partnerID=8YFLogxK
U2 - 10.1016/j.jngse.2014.04.002
DO - 10.1016/j.jngse.2014.04.002
M3 - Article
AN - SCOPUS:84901349954
SN - 1875-5100
VL - 19
SP - 125
EP - 136
JO - Journal of Natural Gas Science and Engineering
JF - Journal of Natural Gas Science and Engineering
ER -