A Micro-Econometric Analysis of the Industrial Demand for Energy in NSW

This paper analyzes an extensive data set consisting of observations on all manufacturing establishments in New South Wales, Australia over an eight-year period. The focus is on the determinants of the demands by manufacturing establishments for different fuels (namely coal, oil, gas and electricity) and, in particular, upon the responsiveness of the demands to changes in the prices of the various fuels, the wage rate, and the rental rate on capital. Particular attention is paid to the facts that (a) establishments have different patterns of fuel consumption and (b) gas and electricity have block-pricing structures. Estimates of own-price elasticities of demand for electricity, gas and oil are higher than appear in the literature.