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Price Elasticity of Demand for Oil and the Terms of Trade of the OPEC Countries

The price elasticity of demand for oil has changed significantly since the sharp rise in oil prices in late 1973. Although oil is still a necessary commodity with a price elasticity of less than one, the policies recently introduced by many importing countries to store oil and reduce its consumption, the continuous development of energy alternatives, and the increase in oil suppliers have contributed significantly to the rise in the price elasticity of demand for this vital commodity.

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Energy Specializations: Petroleum – Markets and Prices for Crude Oil and Products; Energy Modeling – Sectoral Energy Demand & Technology

JEL Codes: Q40: Energy: General, Q41: Energy: Demand and Supply; Prices, Q35: Hydrocarbon Resources, Q37: Nonrenewable Resources and Conservation: Issues in International Trade

Keywords: Price elasticity of oil demand, OPEC countries, Mathematical model

DOI: 10.5547/ISSN0195-6574-EJ-Vol8-No1-4

Published in Volume 8, Number 1 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.


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