کشش تقاضای نفت در باربادوس

The importation of oil is a significant component of Barbados' imports, rising from 7% of imports in 1998 to over 20% in 2009. This increase has impacted greatly on the level of foreign reserves. As a price-taker, relying entirely on imported oil for our energy needs could prove a continuous drain on the economy. With a view to formulating an appropriate energy policy for Barbados, this paper analyses the demand for oil using monthly data from 1998 to 2009. The paper estimates the elasticities of demand for oil by employing PesAran (2001) single equation cointegration approach and comparing the results with countries that rely heavily on imported oil and whose policy objective are to alter their energy structure to rely less on imported oil. The results show that the demand for oil imports is price inelastic in the long run. The consumption of oil is responsive to past consumption, prices, income, electricity consumption and the number of appliances imported in the short-run. A policy framework to reduce the use of oil for electricity consumption via alternative energy sources should be considered and the taxation of oil imports given its elasticity is a good source of revenue.

The importation of oil is a significant component of Barbados' import bill, rising from around 7% of total imports in 1998 to over 20% in 2009. It is now the highest category of imports, accounting for 20.8% of the import bill, surpassing food and beverages and machinery, which account for 16.9% and 14.7%, respectively, of total imports (see Fig. 1). Imported oil for energy has impacted greatly on the level of foreign reserves. Full-size image (48 K) Fig. 1. Source: Central Bank of Barbados. Figure options In addition, as a price-taker, depending entirely on imported oil for our energy needs could prove a continuous drain on the Barbadian economy. With a view to formulating an appropriate energy policy for Barbados, this paper analyses the demand for oil in Barbados using monthly data from 1998 to 2009 and comparing the results to those of countries which also rely considerably on imported oil but are naturally endowed or have invested in alternative sources of energy which may allow them to somewhat alter their energy mix. The study is different from the previous studies by Cox (1978) and Mitchell (2009) in that instead of using the international price per barrel of crude oil, it utilizes an aggregated import oil index1 for Barbados which consists of namely; gasoline, diesel and fuel oil. This index is a better measure of price in that it reflects the actual price that is paid for the refine product as oppose to unrefined crude. The use of the import price of oil2 also accounts for the cost of insurance and freight paid by importers thorough the entire sample period. These costs were previously excluded from past studies in Barbados. The change in the price determination process over the sample period, where a subsidy3 protected consumer from the full pass through of crude oil price increases is also taken into account with the use of the import price index. It is different from the studies by Durant (1991) and Carter et al. (2009), which are confined to one section of energy demand by estimating the demand for electricity. It also tests for the relevance of factors other than income and price such as household appliance and motorcars use in determining the level of energy demand. The paper estimates the elasticities of demand for oil by employing PesAran (2001) single equation cointegration approach. This technique performs well in small samples and allows for direct estimation of results, even when there is a mixture of nonstationary and stationary variables. The paper is divided into five sections. Section 2 continues with a brief review of the literature. The selected model and data are discussed in Section 3, whereas Section 4 present the empirical methods and the results. Section 5 concludes the paper and offers some policy implications.

This paper attempts to model the demand for oil consumption in Barbados using monthly data and for the first time employing a price series representing the true price paid for the refined commodity. The ARDL Error Correction Model by PesAran (2001) is adopted and a general-to-specific approach to arrive at a well-determined model is used. The results are fairly consistent with those obtained in the literature, except for income elasticity of demands, which appears not to be significant in the long run. All of the other variables had their ‘a priori’ expected but not all of them were significant in both the short and long run. The inelastic oil demand may suggest that consumers are constrained by technology and a lack of energy alternatives. Given this result, the taxation of oil is a good source of revenue given the inelasticity. As electricity consumption increases by 1%, the demand for imported oil rises by 1.43%. A policy framework to reduce the use of oil for electricity consumption via alternative energy sources should be considered. From the experiences of Brazil, the authorities should seek to determine whether the investments in alternative sources may be enough to have an offsetting effect on Barbados demand for oil or like China whether the alternative resources are easily accessible at a reasonable cost. However unlike Brazil and China, there is no naturally endowed resource to be used as an alternative other than sunlight which may require substantial time and investment before any gain can be realised.