The demand for transport fuels in Turkey

In this paper, we estimate the demand for transport fuels in Turkey. Specifically, using four different models, namely a partial adjustment model, a distributed lag model, an autoregressive distributed lag model, and an error correction model, we estimate gasoline and diesel demand functions with quarterly data covering the period 2003:Q1–2014:Q3. We find a stable long-run relationship only for diesel demand, income and price. Our results imply that gasoline demand does not respond to income and price in the long run, reflecting a shift from gasoline towards diesel induced by differential tax policies. Furthermore, we find that transport fuel demand is price inelastic, making tax on fuel a perfect tool for raising budget revenues. In addition, our results suggest that fuel demand responds to negative and positive price changes symmetrically.     

Modelling the transport sector fuel demand for developng economies

This paper concentrates on the transport sector of six developing countries with similar common denominators, namely Turkey, Thailand, Pakistan, Morocco, Tunisia and Malaysia. By using standard econometric techniques, we analyse the evolution of oil demand for road transport in these countries in relation to independent variables such as income, population, price of gasoline and diesel etc. Unlike the treatment in the present literature on the subject, gasoline and diesel consumption are estimated separately due to the high share of diesel in the total transport sector consumption. On the basis of the estimation over the period 1970–1990, on a country by country basis, we forecast the demand for these six countries until 2010. The results of this study indicate that the transport sector will be the driving force for energy and oil demand as part of economic growth in these developing countries. Its share in the future energy market structure is expected to grow. Consequently, the (pricing) policies of oil products in this sector have a crucial role for shaping rational economic and energy strategies within the framework of rising environmental concern.     

An analysis of the welfare and distributive implications of factors influencing household electricity consumption

The deep economic crisis and the sharp rise in electricity prices have reduced electricity demand by Spanish households. This paper aims to analyse the responsiveness of household electricity demand and the welfare effects related to both factors in the 2006–2012 period by applying a demand model estimated with the quantile regression method. The results show that the electricity consumption of medium-high income households is particularly responsive to price increases, whereas that of medium-low income households is more responsive to changes in income. The retail electricity price increases and the economic crisis have led to lower and steeper U-shape price elasticities of demand and higher and steeper N-shape income elasticities of demand. The joint impact of those two factors on the welfare of lower-income households is higher in relative terms (i.e., as a share of household income) than for other income groups. These results suggest that the economic crisis and increases in retail electricity prices have had detrimental welfare effects, especially on the lower-income segment of the population. They should be considered when financing climate and energy policies through the electricity bill and provide a rationale to take such support, which pushes the retail electricity price upwards, out of the electricity bill.     

An aggregate petroleum consumption model

This paper presents an aggregative model of US consumption of petroleum and products, of a type which might potentially be used to derive short-term forecasts of US petroleum consumption and imports. The model attempts to separate income- and weather-related changes from those induced by changes in relative prices, with emphasis on the dynamic path of consumption responses to price changes. Estimation results suggest that there are still significant price effects six years after a change in the relative price of petroleum.     

State gasoline consumption in the USA: An econometric analysis

This paper examines the determinants of state gasoline consumption per household in the USA using pooled time-series cross-section data for the period 1966–1980. It was found that gasoline price, fuel efficiency of vehicle stock, percentage of population in metropolitan areas, and non-automobile transport modes have negative effects on consumption, while per capita income, number of vehicles, non-agricultural employment per household, age 18–44, warm weather, visits by out-of-state automobiles, and share of buses and trucks have positive effects on consumption. Holding constant the size of vehicle stock and its fuel-efficiency characteristics, the short-run price elasticity of gasoline was found to be -0.321 for the period 1966–1973 and -0.106 for the period 1974–1980. It was also found that gasoline demand experienced a temporary shift both in the intercept and in the price coefficient during the shortages of 1974 and 1979, and had undergone a permanent shift in the same parameters during the post-embargo period.     

Causes for an asymmetric relation between the price of crude oil and refined petroleum products

We revisit the issue of asymmetries in the relation between the price of crude oil and refined petroleum products in the United States. An econometric analysis of monthly data indicates that the asymmetric relation between the price of crude oil and motor gasoline is generated by refinery utilization rates and inventory behavior. The asymmetric relation between the price of crude oil and home heating oil probably is generated by contractual arrangements between retailers and consumers. Together, these results imply that price asymmetries may be generated by efficient markets. Under these conditions, there is little justification for policy interventions to reduce or eliminate price asymmetries in motor gasoline and home heating oil markets.     

Importance of biodiesel as transportation fuel

The scarcity of known petroleum reserves will make renewable energy resources more attractive. The most feasible way to meet this growing demand is by utilizing alternative fuels. Biodiesel is defined as the monoalkyl esters of vegetable oils or animal fats. Biodiesel is the best candidate for diesel fuels in diesel engines. The biggest advantage that biodiesel has over gasoline and petroleum diesel is its environmental friendliness. Biodiesel burns similar to petroleum diesel as it concerns regulated pollutants. On the other hand, biodiesel probably has better efficiency than gasoline. One such fuel for compression-ignition engines that exhibit great potential is biodiesel. Diesel fuel can also be replaced by biodiesel made from vegetable oils. Biodiesel is now mainly being produced from soybean, rapeseed and palm oils. The higher heating values (HHVs) of biodiesels are relatively high. The HHVs of biodiesels (39–41 MJ/kg) are slightly lower than that of gasoline (46 MJ/kg), petrodiesel (43 MJ/kg) or petroleum (42 MJ/kg), but higher than coal (32–37 MJ/kg). Biodiesel has over double the price of petrodiesel. The major economic factor to consider for input costs of biodiesel production is the feedstock, which is about 80% of the total operating cost. The high price of biodiesel is in large part due to the high price of the feedstock. Economic benefits of a biodiesel industry would include value added to the feedstock, an increased number of rural manufacturing jobs, an increased income taxes and investments in plant and equipment. The production and utilization of biodiesel is facilitated firstly through the agricultural policy of subsidizing the cultivation of non-food crops. Secondly, biodiesel is exempt from the oil tax. The European Union accounted for nearly 89% of all biodiesel production worldwide in 2005. By 2010, the United States is expected to become the world's largest single biodiesel market, accounting for roughly 18% of world biodiesel consumption, followed by Germany.     

Simulation of price controls for different grade of gasoline: The case of Indonesia

A gasoline subsidy is one of the most prevalent strategies for distributing welfare to the people in oil-producing countries. However well-intentioned, the policy will distort the gasoline market with the resulting inefficiencies. Furthermore, the gasoline subsidy takes a great amount of government's budget. Arguably, these funds could be spent elsewhere with a greater impact on economic growth. These governments are aware of the cost of such a policy, yet face difficulties in removing the policy because of strong resistance from the public. This paper looks at the unique case of Indonesia that only provides a subsidy for regular gasoline and in turn proposes an alternative policy that introduces a subsidy for premium gasoline at a lower rate to reduce the overall gasoline subsidy cost. There has yet to be any research that simulates price controls for gasoline with different grades. The aggregate demand for gasoline in Indonesia is replicated using a translog cost calibration approach. Simulations based on the calibrated demand are then performed and the results confirm the existence of potential savings that are largely determined by the cross-price elasticities between regular and premium gasoline. The benchmark scenario, based on a recent study of substitutability between gasoline by grades, results in an 11.5% reduction in subsidy cost of around 950 million USD with a subsidy rate of Rp 2254/liter. Furthermore, the optimal rate of subsidy for premium gasoline results in a reduction of inefficiency as consumers' welfare increase by 6.8 trillion rupiahs (or 560 million USD).     

高油价下的亚太国家能源政策

国际市场油价不断攀升,对亚太发展中国家经济增长带来巨大影响和挑战。许多国家都采取各种措施,积极应对,调整和制定能源政策,通过改善提高能源利用效率,鼓励开发利用可再生能源,积极开展区域合作,优化资源配置,降低对石油资源的依赖,保障能源安全。本文分析了当前油价对经济发展的影响,介绍了部分亚太国家应对油价上涨的能源政策,指出保障能源安全,实现可持续发展是亚太国家能源政策的唯一选择。     

Should a vehicle fuel economy standard be combined with an economy-wide greenhouse gas emissions constraint? Implications for energy and climate policy in the United States

The United States has adopted fuel economy standards that require increases in the on-road efficiency of new passenger vehicles, with the goal of reducing petroleum use and (more recently) greenhouse gas (GHG) emissions. Understanding the cost and effectiveness of fuel economy standards, alone and in combination with economy-wide policies that constrain GHG emissions, is essential to inform coordinated design of future climate and energy policy. We use a computable general equilibrium model, the MIT Emissions Prediction and Policy Analysis (EPPA) model, to investigate the effect of combining a fuel economy standard with an economy-wide GHG emissions constraint in the United States. First, a fuel economy standard is shown to be at least six to fourteen times less cost effective than a price instrument (fuel tax) when targeting an identical reduction in cumulative gasoline use. Second, when combined with a cap-and-trade (CAT) policy, a binding fuel economy standard increases the cost of meeting the GHG emissions constraint by forcing expensive reductions in passenger vehicle gasoline use, displacing more cost-effective abatement opportunities. Third, the impact of adding a fuel economy standard to the CAT policy depends on the availability and cost of abatement opportunities in transport—if advanced biofuels provide a cost-competitive, low carbon alternative to gasoline, the fuel economy standard does not bind and the use of low carbon fuels in passenger vehicles makes a significantly larger contribution to GHG emissions abatement relative to the case when biofuels are not available. This analysis underscores the potentially large costs of a fuel economy standard relative to alternative policies aimed at reducing petroleum use and GHG emissions. It further emphasizes the need to consider sensitivity to vehicle technology and alternative fuel availability and costs as well as economy-wide responses when forecasting the energy, environmental, and economic outcomes of policy combinations.     

Modelling fuel demand for different socio-economic groups

The fuel demand literature provides a range of estimates of the long and short-run price and income elasticities of gasoline demand for different countries and states. These estimates can be very useful in predicting the overall impacts of policy approaches designed to reduce fuel consumption and to address concerns of carbon emissions or energy security. However, analysis of policy options based on elasticities that are homogenous across income groups provides no information about the relative distributional burden that may be faced by different sectors of the population. Different responses to the same change in price or income are likely to occur, dependent on both travel needs and income levels. This paper estimates gasoline demand elasticities for different income quintiles in the United States to test for heterogeneity in demand response. Group wise summary consumer expenditure data for 20 years is used to derive the elasticity estimates. The results show that the elasticities do vary across groups and follow a U-pattern from the lowest to the highest income quintile. The lowest income quintile is found to have the largest price elasticity. The lowest and the highest income quintiles appear to be statistically insensitive to any changes in income. The rebound effect also follows the U-pattern, with the highest rebound observed among the wealthiest households. Rural households appear to have lower price elasticity than households in urban areas.     

Gasoline consumption and the stock of motor vehicles : An empirical analysis for the Swiss economy

The demand for gasoline and the stock of cars is empirically explained for the Swiss economy by applying statistical methods from modern time series analysis to annual data over the period 1962–1985. The short-run price and income elasticities of gasoline consumption are -0.3 to -0.45 and 0.7. The price elasticity became substantially higher after the first OPEC shock in 1973. Pollution control measures introduced in 1982 negatively affected the stock of cars. Longer run effects operating over changes in the size of the stock and the fuel efficiency of cars are stretched out over several years as shown by a variety of simulation experiments.     

Can increasing gasoline supply in the United States affect ethanol production in Brazil?

The increasing supply of non-conventional oil in the U.S. has changed the dynamics of crude oil market and the flow of oil products in the Atlantic Basin. The Gulf of Mexico (GoM) emerges as an exportation hub of oil products, contributing to a scenario in which gasoline prices tend to decline. Meanwhile, from 2010, the competitiveness of the Brazilian sugarcane ethanol has been ruptured by the country's gasoline price policy that had not followed international price parity. The political conjuncture of the U.S. incites high utilization rates of their refining system in the GoM. In this context the profitability of the ethanol business can be impacted in Brazil, by either the current policy of controlled domestic gasoline prices or a future scenario of declining gasoline international prices. Therefore, this study tests if this gasoline price scenario can compromise even more the competitiveness of the Brazilian ethanol. Particularly, for a scenario of falling prices, ethanol production in Brazil would be under strong pressure of gasoline supply coming from the U.S. This can impact Brazil's ethanol industry, whose development has been justified by climate change policies. In that sense, the paper also discusses the future opportunities and challenges for Brazil's ethanol industry.     

Household energy demand in Kenya: An application of the linear approximate almost ideal demand system (LA-AIDS)

This paper estimates price and fuel expenditure elasticities of demand by applying the linear Approximate Almost Ideal Demand system (LA-AIDS) to 3665 households sampled across Kenya in 2009. The results indicate that motor spirit premium (MSP), automotive gas oil (AGO) and lubricants are price elastic while fuel wood, kerosene, charcoal, liquefied petroleum gas (LPG) and electricity are price inelastic. Kerosene is income elastic while fuel wood, charcoal, LPG, electricity, MSP and AGO are income inelastic. The results also reveal fuel stack behaviour, that is, multiple fuel use among the households. Main policy implications of the results include increasing the penetration of alternative fuels as well as provision of more fiscal incentives to increase usage of cleaner fuels. This not withstanding however, the household income should be increased beyond a certain point for the household to completely shift and use a new fuel.     

Energy policy issues in developing countries Lessons from ASEAN''s experience

This paper reviews the energy policy responses of the five countries originally composing the Association of Southeast Nations (ASEAN) — Indonesia, Malaysia, the Philippines, Singapore, and Thailand — following the first price shocks of 1973–1974. It analyses the implications of the demand and supply management policies adopted, especially those related to pricing and diversification. It calls attention to the implications of these policies for structural changes in industries, including the shift away from energy-intensive to labour-intensive technologies; the role that technological change and technology transfer can play; the role of the transport sector in conservation, and the scope for oil-to-coal switching. It raises policy and research questions on the allocative efficiency of demand and supply management policies.     

An analysis of gasoline demand elasticities at the national and local levels in Mexico

The majority of evidence on gasoline demand elasticities is derived from models based on national data. Since the largest growth in population is now taking place in cities in the developing world it is important that we understand whether this national evidence is applicable to demand conditions at the local level. The aim of this paper is to estimate and compare gasoline per vehicle demand elasticities at the national and local levels in Mexico. National elasticities with respect to price, income, vehicle stock and metro fares are estimated using both a time series cointegration model and a panel GMM model for Mexican states. Estimates for Mexico City are derived by modifying national estimates according to mode shares as suggested by Graham and Glaister (2006), and by estimating a panel Within Groups model with data aggregated by borough. Although all models agree on the sign of the elasticities the magnitudes differ greatly. Elasticities change over time and differ between the national and local levels, with smaller price responses in Mexico City. In general, price elasticities are smaller than those reported in the gasoline demand surveys, a pattern previously found in developing countries. The fact that income and vehicle stock elasticities increase over time may suggest that vehicles are being used more intensively in recent years and that Mexico City residents are purchasing larger vehicles. Elasticities with respect to metro fares are negligible, which suggests little substitution between modes. Finally, the fact that fuel efficiency elasticities are smaller than vehicle stock elasticities suggests that vehicle stock size, rather than its composition, has a larger impact on gasoline consumption in Mexico City.     

Effectiveness of China's plug-in electric vehicle subsidy

Subsidies for promoting plug-in electric vehicle (PEV) adoption are a key component of China's overall plan for reducing local air pollution and greenhouse gas emissions from the light-duty vehicle sector. In this paper, we explore the impact and cost-effectiveness of the Chinese PEV subsidy program. In particular, a vehicle choice model is estimated using a large random sample of individual level, model year 2017 Chinese new vehicle purchases. The choice model is then used to predict PEV market share under alternative policies. Simulation results suggest that the 2.5% PEV market share of Chinese new vehicle sales in 2017 resulted in China's new vehicle fleet fuel economy improving by roughly 2%, reducing total gasoline consumption by 6.66 billion liters. However, the current PEV subsidy in China is expensive, costing $1.90 per additional liter of gasoline saved. This is due to a large number of non-additional PEV buyers, particularly high income consumers, who would have purchased the PEV regardless of the subsidy. Eliminating the subsidy for high income consumers and increasing it for low income consumers could result in a substantially lower cost per additional PEV ($13,758 versus $24,506). This would allow for greater PEV adoption (3.11% versus 2.47% market share) for the same budget. In terms of the impact of the recently announced subsidy reduction, results suggest that the PEV market share in China would have declined by 21% had the subsidy been halved without any countervailing measures. Using the same reduced budget, had zero PEV subsidies been given to high-income consumers and higher subsidies been given to low-income consumers, the PEV market share would have declined by only 8%.     

Gasoline demand in Saudi Arabia: are the price and income elasticities constant?

ABSTRACT

The paper investigates gasoline consumption in case of oil-exporting country applying Time-varying Coefficient Cointegration approach to the data from 1980 to 2017. Empirical estimations show that long-run income and price elasticities are not constant and are responsive to price and income fluctuations in the period considered. The income elasticity of gasoline demand increased until 2014, peaking at 0.151, following growth in disposable income, before declining to 0.136 in 2017. However, consumers do not stop driving when their disposable incomes fall, resulting in a less elastic response of gasoline demand to income. Price elasticities sit in the range of ?0.31 to ?0.05, becoming less elastic when prices are low and vice versa.

The findings of the study may be useful in successful implementation of energy price reforms and implementation of environmental policies.     

Asymmetry in retail gasoline and crude oil price movements in the United States: An application of hidden cointegration technique

There is a common belief that gasoline prices respond more quickly to crude oil price increases than decreases. Some economists and politicians believe that asymmetry in oil and gasoline price movements is the outcome of a non-competitive gasoline market requiring that governments take policy action to address “unfair pricing”. There is no consensus as to the existence, or nature, of the asymmetric relationship between prices of gasoline and crude oil. Much of this literature specifies asymmetry in the speed of adjustment and short-run adjustment coefficients. In contrast, Granger and Yoon's [Granger, C.W. and Yoon, G. “Hidden Cointegration”, University of California, San Diego, Department of Economics Working Paper, (2002).] Crouching Error Correction Model (CECM) identifies asymmetry of the cointegrating vectors between components (cumulative positive and negative changes) of the series. Applying the CECM to retail gasoline and crude oil prices for the U.S., we find that there is only evidence of cointegration between positive components of crude oil prices and negative components of gasoline prices. In contrast to the literature which attributes asymmetric price movements to market power of refiners, these findings suggest that gasoline prices –in the long run– are more influenced by the technological changes on the demand side than crude oil price movements on the supply side.     

Modeling the high frequency demand for energy

This paper looks at the nature and length of the impact that prices and economic activity have on the demand for motor gasoline and distillate fuel oil in the United States. A general approach is presented and implemented to aid any energy analyst in gaining insights into the modeling activity. The results suggest that price changes affect the quantity of motor gasoline and distillate fuel oil demanded for as long as two years after an initial change, while changing personal income has an impact for about a year.