Abstract
Few studies have examined in-depth the dynamics of energy consumption within regions or states in spite of the known differences in consumption patterns within nations. To adequately plan and forecast future energy needs and formulate conservation policies, states or regions need basic information such as income and price elasticities, consumption patterns, etc. Here we estimate the energy demand needs of the 16 states that belong to the Southern States Energy Board (SSEB) as a first step toward assessing future demand. A dynamic panel data framework is used to examine the long-run adjustment patterns. The preferred model shows a process of dematerialization over time. Per capita energy demand over time for the south is found to be relatively inelastic with respect to all the variables and more so for price (-0.32) than income (0.40). The level of income at which per capita energy consumption is maximized is $31,623 (in 1995 dollars). Six of the 16 states in the SSEB are found to have reached or surpassed this level of income.
Highlights
This study was motivated by the renewed interest in the socio-economic impact of energy in nation-states and within regions in a nation, as vividly conveyed in the recent California energy debacle (Dismukes, Olatubi, and Mesyanzhinov 2002)
Due to the California energy crisis, U.S citizens are recognizing the significance of a stable, reliable, and secure energy supply. . . . Policy makers in the south should take this opportunity to focus on energy policy in our region and pursue actions that will sustain energy stability in the future
Recent advancements in time series econometrics offer much more ambitious and complex estimators.9. In spite of these developments in the literature, the most common approach to dealing with the problem is by the use of instrumental variables (IV)
Summary
This study was motivated by the renewed interest in the socio-economic impact of energy in nation-states and within regions in a nation, as vividly conveyed in the recent California energy debacle (Dismukes, Olatubi, and Mesyanzhinov 2002). This interest is not new, the quotations below exemplify a familiar refrain all over the world, especially in the industrialized nations, since the energy crisis of the mid-1970s. This imbalance, if allowed to continue, will inevitably undermine our economy, our standard of living, and our national security (National Energy Policy Development Group 2001). Due to the California energy crisis, U.S citizens are recognizing the significance of a stable, reliable, and secure energy supply. . . . Policy makers in the south should take this opportunity to focus on energy policy in our region and pursue actions that will sustain energy stability in the future
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