By focusing on two major drivers of oil demand – i.e. oil price and technical progress – this article presents a thorough behavior analysis of energy-intensive manufacturing industries’ oil demand in European countries, which imported Iranian oil during 1980-2010. The growth accounting method and estimating parametric cost function are employed as analysis tools and the significance level of converted parameters are investigated with using Delta technique. The results show that studied industries have experienced technical progress during the examination period which resulted in reduced oil demand. It is expected that oil demand experiences the significant decrease in response to rising oil prices. Oil price and technical progress have positive impacts on average oil productivity (and thereby decreasing demand for oil). Furthermore, estimation of cross price elasticity indicates that rising oil prices lead to reduce oil demand and raw material and capital replace oil. In the studied industries, reduced oil demand as a result of rising oil prices (through between factor substitution and oil efficiency)and technical progress implies the restriction of Iran's oil revenues, as well as officials and policy makers, focus on the development of oil products, petrochemicals, electricity, and natural-gas export.
azami S, lobabi mirghavami S. 09 The Effect of Oil Price and Technical Progress on Oil Demand:
Energy-intensive Manufacturing Industries
in European Importer of Iranian Oil
. qjerp 2017; 25 (81) :311-344 URL: http://qjerp.ir/article-1-1675-en.html