An economic analysis of the demand for residential space heating fuel in Canada

Abstract

The objectives of this study were the development and application of a model of residential space-heating demand, which incorporates economic, family-composition and structural housing factors as explanatory variables. We assess the impact of home retrofitting and other conservation actions on residential energy demand by analyzing data collected as part of a national sample of Canadian households, which are supplemented with rate-structure and energy-price data. Models of demand for space-heating fuels are estimated for residential users of electricity, natural gas and oil. Parameter estimates are corrected for sample-selection bias. The results indicate that residential consumers of space-heating fuels in Canada exhibit a price response that is significantly different from zero. Further, households facing higher than average utility prices before experiencing a fuel-price increase will, in the long run, exhibit a unitary price response.