Korean Energy Economic Review ISSN:1599-7057(Print) 에너지경제연구

Korea’s energy import dependency is 94.8% as of 2021, has maintained this level for the past 30 years. In this study, the demand system between energy sources including coal, crude oil, and natural gas, labor, and other inputs was estimated using a two-stage demand system model to reveal that the demand pattern for primary energy is changing. According to the estimation results, in the period before 1998, self-price elasticity was a positive value for all goods. All of them showed positive values for total output. In the period after 1999, the self-price elasticity of all goods showed negative values. It was found to have a positive value for the total output. According to the estimation results for the primary energy, the cross-price elasticity between coal and crude oil, which are in charge of base power while substitute fuel oil with electricity, was found to be a significant positive value. It is not very often to experience price change of primary energy to produce conversion energy because the price of electricity and petroleum products are regulated in Korea. However, for countries with a high energy import dependency, such as Korea, price change of primary energy are exposed to greater risks because they are induced from international energy market. Therefore it is necessary to examine the demand response to primary energy that is changing over time.