Modelling demand for crude oil products in Spain

This paper develops an econometric model for the five most important crude oil products demand in Spain. The aim is the estimation of a range of elasticities of such demands that would serve as the basis for an applied general equilibrium model used for forecasting energy demand in a broader framewo...

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Bibliographic Details
Published in:Energy policy 2009-11, Vol.37 (11), p.4417-4427
Main Authors: Pedregal, D.J., Dejuán, O., Gómez, N., Tobarra, M.A.
Format: Article
Language:English
Subjects:
Applied sciences
Commercial products
Crude oil
Crude oil product
Crude oil product Demand elasticity Unobserved component model
Demand elasticity
Econometrics
Economic data
Economic equilibrium
Economic forecasts
Economic models
Elasticity of demand
Energy
Energy consumption
Energy economics
Exact sciences and technology
Forecasting
Forecasting techniques
Fossil fuels and derived products
General, economic and professional studies
Information sources
Methodology. Modelling
Model testing
Multivariate analysis
Non-renewable resources
Oil
Oil products
Petroleum
Petroleum industry
Spain
Studies
Supply and demand
Unobserved component model
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Summary:This paper develops an econometric model for the five most important crude oil products demand in Spain. The aim is the estimation of a range of elasticities of such demands that would serve as the basis for an applied general equilibrium model used for forecasting energy demand in a broader framework. The main distinctive features of the system with respect to previous literature are (i) it takes advantage of monthly information coming from very different information sources and (ii) multivariate unobserved components (UC) models are implemented allowing for a separate analysis of long- and short-run relations. UC models decompose time series into a number of unobserved though economic meaningful components mainly trend, seasonal and irregular. A module is added to such structure to take into account the influence of exogenous variables necessary to compute price, cross and income elasticities. Since all models implemented are multivariate in nature, the demand components are allowed to interact among them through the system noises (similar to a seemingly unrelated equations model). The results show unambiguously that the main factor driving demand is real income with prices having little impact on energy consumption.
ISSN:0301-4215
1873-6777
DOI:10.1016/j.enpol.2009.05.062