THE DETERMINANTS AND FORECASTING OF ENERGY CONSUMPTION AND SUPPLIES IN PAKISTAN FROM 1972 TO 2010
Loading...
Date
2008
Journal Title
Journal ISSN
Volume Title
Publisher
Department of Economics, University of Peshawar. Khyber Pakhtunkhwa, Pakistan
Abstract
Pakistan faces severe energy crisis which has serious repercussion on different segments of economy. Proper identification of determinants of energy consumption and supply, and accurately forecasting of energy demand and supply is crucial for policy origination and proper implementation to overcome ongoing energy crisis. The present study focuses on to assess the determinants and forecasting of energy consumption and supply in Pakistan using timeseries data from 1972 to 2010. For the analysis ofunit root in data ADFhas been incorporated, Johansen co integration test, ECM are used to investigate the long and short run estimates ofthe required objectives, and ARIMA models were used to estimates the forecast their future values. The empirical results of the study reveal the existence of long run relationship among variables of interest and ECM technique confirms stable long run equilibrium on the basis of short run dynamics for all
components of energy consumption and supply. It is found from regression results that GDP,industrialization, total vehicle registration, price of petroleum, price of gas, total energy import (coal) and cement production are statistically significant determinants of components of energy consumption, and total petroleum import, price of petroleum, technology, gross fixed capital formation, total electricity consumption, foreign direct investment, total vehicle registration and employment are statistically significant determinants of components of energy supply. Further the results of the study revealed that total energy consumption has strong and significant effect on economic growth of Pakistan. The forecasting results of ARIMA models suggest increasing gap between energy demand and supply from 2011 to 2025. Moreover, the study results suggest that energy consumption and supply are inelastic to economic activity and energy prices which mean there is need for economic deregulation and modification in energy market in the shape of privatization and liberalization. The finding of the study suggests that government and private sectors should inject more funds to energy sector in favor of technology and to enhance energy supply to meet increasing demands of energy.