Investigating the Natural Gas Demand Function in the Home Sector of Khuzestan Province: An Almost Ideal Demand System

Abstract

Natural gas has a special place in relation to other energy carriers due to its environmental advantages in energy consumption policies. Also, among the various energy consuming sectors in the country, the share of the domestic sector in natural gas consumption is higher than that of other sectors. The aim of this study was to investigate the function of natural gas demand using an almost ideal demand system. For this purpose, the data of Khuzestan province during the period of 1988-2018 were used and the equations were estimated with the help of seemingly unrelated regression methods. The Calculation of intrinsic price elasticities using constrained and non-constrained models showed that all these elasticities were negative. So that in the constrained and non -constrained model, the intrinsic price elasticity of natural gas is 0.92 and 0.9. Also, the study of natural gas income elasticity in the non -constrained and constrained models is positive and 0.9608 and 0.9613, respectively, and indicates that natural gas is an essential commodity in the basket of Khuzestan households

Keywords

• natural gas demand
• regression seems unrelated
• price and income elasticities