Estimation of Iranian Natural Gas Demand Function Using ARDL Estimation Method

Abstract

Based on its advantages and providing a big part of total energy in the country, natural gas lies in a prominent place among other energy sources. Making cognition and accurate identification of practical elements on the volume of periodic (short and long) demands on natural gas can help us outline suitable plans and policies related to energy. By this view, practical items on natural gas demands had been evaluated. The ARDL pattern with distributed interruptions and ECM model was employed to investigate the function of demands on natural gas during the years from 1976 to 2013. The result proved all coefficients of variables in short and long periods. The natural gas price ratio confirms a contrary relation between natural gas demand and its price in the short term. This ratio in the long-term shows a direct connection between them. Related results to the electricity price ratio show that the electricity price variable has the most positive effect on natural gas demands . Related results show that natural gas's long-term price and income strain are more than short-term ones. Also, results show that natural gas in short periods is a non-strained and necessary commodity. Being non-strained in the short-term results in a lack of efficiency of price policies. So, releasing the price of natural gas can prevent unnecessary consumption of this valuable fuel. Price strain of natural gas in long spans proves that natural gas is a complete strain commodity. This fact is based on why there is some replacement for natural gas, such as electricity and gasoline, for long periods. The minus behind income strain shows that natural gas in the long-term is as low stuff. Intersecting the price of electricity in short and long-term investigations is positive and shows a substitutional relation between electricity and natural gas. The negative intersecting strain of price of kerosene shows that natural gas and kerosene in both the short and long-term are complementary. Also, the gasoline price ratio confirms the complementary relationship in the short-term and substitutional relation in the long-term between natural gas and gasoline.