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Macroeconomic and sectoral effects of natural gas price: Policy insights from a macroeconometric model

Author

Listed:
  • Hasanov, Fakhri J.
  • Javid, Muhammad
  • Mikayilov, Jeyhun I.
  • Shabaneh, Rami
  • Darandary, Abdulelah
  • Alyamani, Ryan

Abstract

Saudi Arabia has been implementing domestic energy price reforms to rationalize energy consumption and enhance the overall efficiency of its energy system. Since energy makes up one of the most significant building blocks in Saudi Arabia's economy, reforms in the energy sector will have implications on macroeconomic and sectoral developments. Natural gas played a key role in the Kingdom's industrial development. This paper utilizes a unique framework that first estimates the impacts of own price, a substitute fuel price, income, and utilization capacity on industrial natural gas demand in Saudi Arabia. The estimated equation is then incorporated into a macro-econometric model to simulate the effects of natural gas prices, a policy lever, on key macroeconomic and sectoral indicators across various scenarios.

Suggested Citation

  • Hasanov, Fakhri J. & Javid, Muhammad & Mikayilov, Jeyhun I. & Shabaneh, Rami & Darandary, Abdulelah & Alyamani, Ryan, 2025. "Macroeconomic and sectoral effects of natural gas price: Policy insights from a macroeconometric model," Energy Economics, Elsevier, vol. 143(C).
    • Handle: RePEc:eee:eneeco:v:143:y:2025:i:c:s0140988325000568
    DOI: 10.1016/j.eneco.2025.108233
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