Oil demand and energy security in Asian countries

Chin-Ho Cho, Yun-Peng Chu, Hao-Yen Yang

Abstract

ABSTRACT

In this paper we attempt to use the panel fully modified ordinary least squares approach to study the crude oil demand in Asian countries over the period 1971- 2005. The empirical results support the hypothesis that, in comparison with member countries of the Organisation for Economic Co-operation and Development, gross domestic product still plays an important role in explaining the demand for crude oil in Asian countries. In terms of price elasticity, we show that a rise in the oil price due to the depletion of oil in the future will not easily reduce oil consumption and will only result in extreme inflation. Moreover, we find that the advance of renewable energy does little to reduce oil consumption in Asian countries.