Abstract
This paper examines how residential sector gas demand in gas exporting countries response to changes by taking into consideration the economic variables. For this purpose, the short and long-run price and income elasticities of residential sector gas demand in the GECF countries for 2000 and 2019 are measured. Using Cobb-Douglas functional form, this paper applies the bounds testing approach to co-integrate within the framework of ARDL (Autoregressive Distributed Lag). Findings of this research show that there is a significant long-run relationship in nine GECF countries, including Algeria, Egypt, Iran, Malaysia, Norway, Peru, Russia, Trinidad and Tobago and Venezuela, that use gas as a source of energy in their residential sector. On average, long-rung income elasticity for underlying countries is 2.65, while long-run price elasticity is negative and calculated at 0.79. This shows that in considered gas exporting countries, residential sector gas demand is very sensitive to income policies, while the price policies impact on demand is more limited. Furthermore, short-run income and price elasticities are estimated at 6.99 and -0.02 (near zero) respectively, which implies that natural gas is very inelastic to price, as a result,price policies are unable to make significant changes in demand over the short-term. Meanwhile, as expected short-run price elasticity is lower than long-run elasticities, indicating that gas exporting countries are more responsive to price in the long-term than in the short-term. Finally, it was found that most of the preferred models have empirical constancy over the sample period. 
Highlights
This paper aims to investigate how residential sector gas demand responses to changes in gas price and economic activity
The main contribution of this study is to provide price and income elasticity of natural gas demand for Gas Exporting Countries Forum (GECF) gas exporting countries to fill the gap in the literature
From equation (4), G is defined as residential consumption of gas per capita measured as toe (Ton Oil Equivalent), Y represent household net disposable income per capita measured as real million US$, while P is the value of residential sector gas price presented at real US$ per toe
Summary
This paper aims to investigate how residential sector gas demand responses to changes in gas price and economic activity. Given that climate mitigation strategies are often based on lowering the carbon intensity of GDP, it is important to know whether the income elasticity is less than the unity, which implies that energy intensity will fall in a business-as-usual economic growth scenario (Liddle et al, 2020). Both price and income elasticities are significant for the design of energy and climate policy
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