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

Industrial gas demand in Korea has increased dramatically since the high oil price period occurred in 2008. This drastic change in gas consumption may be due to strong interfuel competition in industrial gas market. Moreover, income/price elasticity of industrial gas demand may vary across sub-sectors within manufacturing industry. Large consumers such as petrochemical industry are more sensitive to price completion than light industry. Therefore we need more detailed information in by disaggregate analysis of industrial gas demand, but only aggregate consumption gas data is available. In an overcome this situation, we propose regional demand forecasting models for industrial gas demand in Korea. This modeling strategy exploits the spatial concentration of gas intensive industries in Korea, thus we can expect that the patterns of regional gas demand are similar to those of the industries. Estimation results from our regional model show that price competition varies across regions. To evaluate the accuracy of proposed regional forecasting model, we also conduct out of sample forecasts. Our forecast exercise for 2014-2017 period reveals the regional forecast model generally outperforms the national forecasting model.