Natural Gas Availability and the Residential Demand for Energy

Not all households have access to pipeline-delivered natural gas. This fact affects not only the demand for natural gas but the demand for electricity and fuel oil as well. Since electricity and natural gas are substitutes in cooking, space heating, water heating, and (to a much lesser extent) cooling, the price elasticity of demand for electricity will be larger when gas is available than when it is not. Fuel oil and natural gas are substitutes in cooking, space heating, and water heating, so that one should also expect larger price elasticities for fuel oil when gas is available.