Price Elasticity of Natural Gas in Residential and Industrial Sectors: A Review on Methods and Results

Document Type : Original Article

Authors

1 Department of Energy System Engineering, Faculty of Mechanical Engineering, K.N. Toosi University of Technology, Tehran, Iran

2 Renewable Energy Research Department, Niroo Research Institute (NRI), Tehran, Iran

3 Specialized Center for Innovation and Technology Development for Energy Consumption Management, NRI, Tehran, Iran

4 Iran’s Renewable Energy and Energy Efficiency Organization (SATBA), Tehran, Iran

10.22059/ses.2024.378003.1073

Abstract

In recent years, population growth and economic development have significantly increased energy demand. Natural gas, in particular, plays a crucial role in various industries, including the electricity sector. Therefore, understanding the structure of natural gas consumption across different sectors and planning for its supply and distribution is of paramount importance. In Iran, natural gas consumption has consistently surpassed crude oil over the past 17 years, with its share in the country’s energy basket growing significantly due to vast natural gas reserves. Consequently, controlling consumption in this sector is especially important. Demand, an economic phenomenon, is analyzed using various demand function models, which are based on changes in consumer behavior due to price and income variations. One effective method for implementing consumption control policies is increasing the price of energy carriers, including natural gas. However, it is important to note that the demand for some essential products is less elastic to price changes. To develop appropriate policies for natural gas, we reviewed studies published in domestic journals on the price elasticity of natural gas in the residential and industrial sectors. The results indicate that, according to regression and time series methods, natural gas is an inelastic commodity in Iran. Therefore, policymakers should consider alternative strategies to reduce natural gas consumption.

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Main Subjects

References

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Journal of sustainable Energy Systems
Volume 3, Issue 2
April 2024
Pages 151-171

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