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Quantifying the Impact of Exogenous Non-Economic Factors on UK Transport Oil Demand

Author

Listed:
  • David C Broadstock

    (Surrey Energy Economics Centre (SEEC), Department of Economics, University of Surrey)

  • Lester C Hunt

    (Surrey Energy Economics Centre (SEEC), Department of Economics, University of Surrey)

Abstract

This paper attempts to quantify the impact of exogenous non-economic factors on UK transport oil demand (in addition to income, price, and fuel efficiency) by estimating the demand relationship for oil transport for 1960-2007 using the Structural Time Series Model. From this, the relative impact on UK transport oil demand from income, price, and efficiency are quantified. Moreover, the impact of the non-economic factors is also quantified, based on the premise that the estimated stochastic trend represents behavioural responses to changes in socio-economic factors and changes in lifestyles and attitudes. The estimated elasticities for income, price and efficiency are 0.6, -0.1, and -0.3 respectively and it is shown that for efficiency and price the overall contribution is relatively small, whereas the contribution from income and non-economic factors is relatively large. This has important implications for policy makers keen to reduce transport oil consumption and associated emissions, but not willing to reduce the trend rate of economic growth. Taxes and improved efficiency only have a limited impact; hence, a major thrust of policy should perhaps be on educating and informing consumers to persuade them to change their lifestyle and attitudes and thus reduce their consumption through the non-economic instruments route.

Suggested Citation

  • David C Broadstock & Lester C Hunt, 2009. "Quantifying the Impact of Exogenous Non-Economic Factors on UK Transport Oil Demand," Surrey Energy Economics Centre (SEEC), School of Economics Discussion Papers (SEEDS) 123, Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey.
    • Handle: RePEc:sur:seedps:123
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    File URL: https://repec.som.surrey.ac.uk/seeds/SEEDS123.pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Transport oil demand; Structural Time Series Model; STSM; Underlying Energy Demand Trend; UEDT; Exogenous Non-Economic Factors; ExNEF.;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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