Income, price and government expenditure elasticity of oil consumption in the Gulf Cooperation Council Countries

Journal Article

• Magazine \ Newspaper: International Journal of Energy Economics and Policy
• Issue Number: 4
• Volume Number: 2
• Pages: 333 – 341.

Publication Abstract

The analysis of the domestic oil consumption data in the six Gulf Cooperation Council

(GCC) countries has reached five important findings. First, contemporaneously, no robust short run

relationships are found in the data. Second, the international oil price increases tend to induce

increased domestic oil consumptions in all member countries except in Oman. Third, three member

countries, Bahrain, Kuwait and United Arab Emirates, are found to be oil conserving as their per

capita GDP grow and expand; whereas, the other three countries, Oman, Qatar and Saudi Arabia, tend

to drive up their domestic oil consumptions as their per capita GDP expand and grow. Fourth, the

three oil-conserving countries also have higher income elasticity than the three non-oil conserving

countries. Finally, the domestic oil markets are found to be immune to disturbances and shocks to the

international oil prices. Therefore, in the face of rising oil prices, per capita oil consumptions are

rapidly raising in the GCC countries, while they have taken downward trends in some developed

countries such as the United States and Japan