THE DETERMINANTS OF OIL DEMAND: EVIDENCE FROM ITALY

The main purpose of this paper is to estimate price and income elasticities of crude oil demand in the Italian economy between 1975 and 2014. The Bound Test is employed as an econometric estimation method. According to Bound Test result, a cointegration relationship has been found between oil consumption, oil prices, and real income. Empirical findings show that the long-run income elasticity and price elasticity of oil demand are statistically insignificant in Italy. In addition, price and income elasticities of oil demand estimated as negative-inelastic and positive-inelastic in the short run, respectively. Thus, crude oil can be defined as a necessity good for Italian consumers over the short term. Also, Error Correction Term (ECT) is estimated to be -1.18. According to ECT, a deviation from the long run equilibrium level of oil demand is corrected about one year later. Italy is an energy dependent country and imports most of it. Since crude oil is necessity, the government should diversify energy sources which are consumed in the entire country and/or undertake policies to increase energy efficiency.

Anahtar Kelimeler:

Bound test, cointegration, Italy, oil demand

PETROL TALEBİNİN BELİRLEYİCİLERİ: İTALYA ÖRNEĞİ

Bu çalışmanın temel amacı 1975 ve 2014 dönemi için İtalya ekonomisindeki petrol talebinin fiyat ve gelir esnekliklerini tahmin etmektir. Bu amaç için Sınır Testi ekonometrik tahmin yöntemi olarak kullanılmıştır. Elde edilen sonuçlara göre, petrol tüketimi, petrol fiyatları ve reel gelir seviyesi arasında bir eşbütünleşme ilişkisi tespit edilmiştir. Ampirik sonuçlara göre, petrol talebinin fiyat ve gelir esneklikleri uzun dönemde istatistiki olarak anlamsızdır. Bunun yanında, kısa dönemde ise fiyat ve gelir esneklikleri sırasıyla negatif-sert ve pozitif-sert olarak tahmin edilmiştir. Bu yüzden, ham petrol kısa dönemde İtalyan tüketiciler için zorunlu mallar arasında gösterilebilir. Bununla birlikte, Hata Düzeltme Terimi (HDT) -1.18 olarak hesaplanmıştır. HDT’ye göre, petrol talebinin uzun dönem dengesindeki bir sapma yaklaşık bir sene sonra dengeye gelmektedir. İtalya, enerjiye bağımlı bir ülkedir ve tüketiminin çoğunu ithalat yoluyla karşılamaktadır. Ham petrolün zorunlu mallar arasında yer almasından dolayı, İtalyan hükümeti ülkedeki enerji kaynaklarını çeşitlendirmeli ve/veya enerji verimliliğini arttırıcı politikalar üstlenmelidir.

Keywords:

Sınır testi, eşbütünleşme, İtalya, petrol taleb,

PDF

___

Altinay, G. (2007), “Short-Run and Long-Run Elasticities of Import Demand for Crude Oil in Turkey”, Energy Policy , 35(11), 5829-5835.
Behmiri, N.B., J.R.P. Manso (2013), “How Crude Oil Consumption Impacts on Economic Growth of Sub-Saharan Africa?”, Energy, 54, 74-83.
Bhattacharyya, S.C. (2011), Energy Economics: Concepts, Issues, Markets and Governance, Springer Science & Business Media.
Bildirici, M.E., T. Bakirtas (2014), “The Relationship Among Oil, Natural Gas and Coal Consumption and Economic Growth in BRICTS (Brazil, Russia, India, China, Turkey and South Africa) Countries”, Energy, 65, 134-144.
Bloch, H., S. Rafiq, R. Salim (2015), “Economic Growth with Coal, Oil and Renewable Energy Consumption in China: Prospects for Fuel Substitution”, Economic Modelling, 44, 104-115.
British Petroleum (2015), Historical Data Workbook. BP Statistical Review of World Energy 2015, http://www.bp.com (Accessed March 11, 2016)
Chateau, B., B. Lapillonne (1982), Energy Demand in The Residential and Tertiary Sector, in Energy Demand: Facts and Trends, Vienna: Springer.
Cooper, J.C. (2003), “Price Elasticity of Demand for Crude Oil: Estimates for 23 Countries”, OPEC Review, 27(1), 1-8. Department of Energy (2007), Energy Efficiency and Renewable Energy. Secondary Energy Infobook.
Dergiades, T., L. Tsoulfidis (2008), “Estimating Residential Demand for Electricity in the United States, 1965–2006”, Energy Economics, 30(5), 2722-2730.
Dritsakis, N. (2011), “Demand for Money in Hungary: An ARDL Approach”, Review of Economics and Finance, 5, 1-28.
Engle, R.F., C.W. Granger (1987), “Co-Integration and Error Correction: Representation, Estimation, and Testing”, Econometrica: Journal of The Econometric Society, 55(2), 251-276.
Erdal, G., H. Erdal, K. Esengün (2008), “The Causality Between Energy Consumption and Economic Growth in Turkey”, Energy Policy, 36(10), 3838-3842.
Eurostat (2016), Energy Statistics, Http://Ec.Europa.Eu/Eurostat/Web/Energy/Data/Database (Accessed April 4, 2016)
Fuinhas, J.A., A.C. Marques (2012), “Energy Consumption and Economic Growth Nexus in Portugal, Italy, Greece, Spain and Turkey: An ARDL Bounds Test Approach (1965–2009)”, Energy Economics, 34(2), 511-517.
Ghosh, S. (2009), “Import Demand of Crude Oil and Economic Growth: Evidence from India”, Energy Policy, 37(2), 699-702.
Granger, C.W., P. Newbold (1974), "Spurious Regressions in Econometrics”, Journal of Econometrics, 2(2), 111-120. Johansen, S. (1988), “Statistical Analysis of Cointegration Vectors”, Journal of Economic Dynamics and Control, 12(2), 231-254.
Johansen, S., Juselius, K. (1990), “Maximum Likelihood Estimation and Inference on Cointegration-With Applications to the Demand for Money”, Oxford Bulletin of Economics and Statistics, 52(2), 169-210.
Kim, H.S., Baek, J. (2013), “Assessing Dynamics of Crude Oil Import Demand in Korea”, Economic Modelling, 35, 260-263.
Kydes, A. (2007), Primary Energy. Http://www.Eoearth.Org/View/Article/155350/ (Accessed April 4, 2016).
Lee, J., Strazicich, M.C. (2003), “Minimum Lagrange Multiplier Unit Root Test with Two Structural Breaks”, Review of Economics and Statistics, 85(4), 1082-1089.
Lee, J., Strazicich, M.C. (2004), “Minimum LM Unit Root Test with One Structural Break”, Manuscript, Department of Economics, Appalachian State University, 1-16.
Magazzino, C. (2014), “The Relationship Between CO2 Emissions, Energy Consumption and Economic Growth in Italy”, International Journal of Sustainable Energy, 1-14.
Magazzino, C. (2015), “Energy Consumption and GDP in Italy: Cointegration and Causality Analysis”, Environment, Development and Sustainability, 17(1), 137-153.
Narayan, P.K., Smyth, R. (2008), “Energy Consumption and Real GDP in G7 Countries: New Evidence from Panel Cointegration with Structural Breaks”, Energy Economics, 30(5), 2331-2341.
Nicholson, W., Snyder, C. (2011), Microeconomic Theory: Basic Principles and Extensions, Nelson Education.
Omri, A. (2013), “CO2 Emissions, Energy Consumption and Economic Growth Nexus in MENA Countries: Evidence from Simultaneous Equations Models”, Energy Economics, 40, 657-664.
Ouedraogo, N.S. (2013), “Energy Consumption and Economic Growth: Evidence from The Economic Community of West African States (ECOWAS)”, Energy Economics, 36, 637-647.
Pesaran, M.H., Shin, Y., Smith, R.J. (2001), “Bounds Testing Approaches to the Analysis of Level Relationships”, Journal of Applied Econometrics, 16(3), 289-326.
Saboori, B., Sulaiman, J. (2013), “CO2 Emissions, Energy Consumption and Economic Growth in Association of Southeast Asian Nations (ASEAN) Countries: A Cointegration Approach.”, Energy, 55, 813-822.
Villa, M. (2015), 2014 In Refining: Europe is Ailing, Italy is Worse, Http://Www.Ispionline.It/En/Energy-Watch/2014-Refining-Europe-Ailing-Italy-Worse-12018 (Accessed March 17, 2016).
World Bank (2016), Http://Data.Worldbank.Org/ (Accessed March 11, 2016).
Ziramba, E. (2010), “Price and Income Elasticities of Crude Oil Import Demand in South Africa: A Cointegration Analysis”, Energy Policy, 38(12), 7844-7849.