Foreign Trade, Population and Energy Consumption: Evidence from Selected Oil Producing Countries

Abstract

The increasing importance of energy in the formation and development of economic processes and the need to exploit this valuable resource highlights identification of the factors that influence energy consumption. In this paper, the effects of foreign trade, population, oil prices, income and value added of economic sectors (agriculture and industry) on energy consumption have been studied. To estimate the effects of variables, the econometric techniques of panel data with the method of generalized least squares (GLS) and generalized moments (GMM) has been employed. Empirical results from analyzing 21 selected oil producing countries during the period 1999-2010, show that foreign trade (sum of exports and imports), population, income and value-added of economics sectors have a positive impact while oil prices have a negative impact on energy consumption. Also, in order to realize the more detailed results, separately analysis of exports and imports suggest that the effect of exports and imports on energy consumption is positive. According to research findings in terms of price elasticity of demand, energy is a good with a low elasticity of demand, while in the case of income elasticity energy has been found as a necessary good.