Transport energy demand in Kuwait : the public authority for applied education and training \

Abstract EN

This study presents a model of the demand for oil products in the transportation sector in Kuwait using time series data for the period 1975-2000.

The results indicate that the demand for gasoline is inelastic with respect to price and income in the short and long run.

The demand has a short run elasticity approaching unity when it comes to the fuel average economy of the fleet of automobiles, which indicates a rapid response to global changes in the automobiles' technology.

Furthermore, the results reveal that diesel fuel consumption is price and income inelastic in the short run but exceeds unit elasticity in the long run.

As for the case of aviation fuel, the demand is inelastic with respect to the price in the short run but it exceeds unit elasticity with respect to the number of flights landed in Kuwait airport, which indicates that the level of activity is more significant in determining the demand for aviation fuel than its own price. The Simulation of the estimated model under various scenarios regarding energy prices revealed that there are definite long run advantages to introducing an upward oil products prices adjustment. There is a great potential for energy savings in the transportation sector. If prices remain unchanged, there will be little incentive for energy conservation.