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Natural Gas Availability and the Residential Demand for Energy

Abstract:
Not all households have access to pipeline-delivered natural gas.This fact affects not only the demand for natural gas but the demand for electricity and fuel oil as well. Since electricity and natural gas are substitutes in cooking, space heating, water heating, and (to a much lesser extent) cooling, the price elasticity of demand for electricity will be larger when gas is available than when it is not. Fuel oil and natural gas are substitutes in cooking, space heating, and water heating, so that oneshould also expect larger price elasticities for fuel oil when gas is available.

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Energy Specializations: Energy Modeling – Energy Data, Modeling, and Policy Analysis; Natural Gas – Exploration and Production

JEL Codes:
E61 - Policy Objectives; Policy Designs and Consistency; Policy Coordination
D24 - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

Keywords: Natural gas, Residential energy demand, Interfuel substitution, Price elasticities

DOI: 10.5547/ISSN0195-6574-EJ-Vol4-No1-2


Published in Volume 4, Number 1 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.