Abstract
As in many African countries, crude oil importation is a major drain on the economy of Ghana. We estimate short-run and long-run import demand models for crude oil using data over the period 1980–2012. Results show that demand for crude oil is price inelastic in the short-run but elastic in the long-run. Other important drivers of crude oil import are the real effective exchange rate, domestic oil production and population growth. Income is found to be the strongest driver of crude oil demand. Policy implications of our results are presented.
Article PDF
Avoid common mistakes on your manuscript.
References
Adewuyi, A.O., 2016. Determinants of import demand for non-renewable energy (petroleum) products: empirical evidence from Nigeria. Energy Econ. 95, 73–93.
Akinboade, O.A., Ziramba, E., Kumo, W.L., 2008. The demand for gasoline in South Africa: an empirical analysis using co-integration techniques. Energy Econ. 30, 3222–3229.
Altinay, G., 2007. Short-run and long-run elasticities of import demand for crude oil in Turkey. Energy Policy 35, 5829–5835.
Alves, D.C.O., Bueno, R.D.L.D.S., 2003. Short-run, long-run and cross elasticities of gasoline demand in Brazil. Energy Econ. 25, 191–199.
Askari, H., Krichene, N., 2010. An oil demand and supply model incorporating monetary policy. Energy 35, 2013–2021.
Broadstock, D.C., Hunt, L.C., 2010. Quantifying the impact of exogenous non-economic factors on UK transport oil demand. Energy Policy 38, 1559–1565.
Brown, R.L., Durbin, J., Evans, J.M., 1975. Techniques for testing the constancy of regression relations over time. J. R. Stat. Soc. Ser. B 37, 149–163.
Cooper, J.C.B., 2003. Price elasticity of demand for crude oil: estimates for 23 countries. OPEC Rev. 27 (1), 1–8.
Dargay, J.M., Gately, D., 2010. World oil demand’s shift toward faster growing and less price-responsive products and regions. Energy Policy 38, 6261–6277.
Dées, S., Karadeloglou, P., Kaufmann, R.K., Sánchez, M., 2007. Modelling the world oil market: assessment of a quarterly econometric model. Energy Policy 35, 178–191.
Ediger, V.S., Berk, I., 2011. Crude oil import policy of Turkey: historical analysis of determinants and implications since 1968. Energy Policy 39, 2132–2142.
Essandoh-Yeddu, J., Yalamova, R., 2015. Current drop in oil prices: impact on Africa. International Association for Energy Economics (IAEE) Energy Forum 4th Quarter, pp. 37–40.
Ghosh, S., 2009. Import demand of crude oil and economic growth: evidence from India. Energy Policy 37, 699–702.
Ghouri, S.S., 2001. Oil demand in North America: 1980–2020. OPEC Rev. 25 (4), 339–355.
IEA, 2013. IEA energy statistics 2013. Available at http://www.iea.org/statistics/.
International Monetary Fund, 2015. World Economic Outlook: Adjusting to Lower Commodity Prices (Washington, DC (October), USA).
International Monetary Fund, 2017. Primary Commodity Prices Online Database (Accessed July 25, 2017).
Iwayemi, A., Adenikinju, A., Babatunde, M.A., 2010. Estimating petroleum products demand elasticities in Nigeria: a multivariate cointegration approach. Energy Econ. 32, 73–85.
Jabir, I., 2009. The dynamic relationship between the US GDP, imports and domestic production of crude oil. Appl. Econ. 41 (24), 3171–3178.
Krichene, N., 2002. World crude oil and natural gas: a demand and supply model. Energy Econ. 24, 557–576.
MacKinnon, J.G., 1996. Numerical distribution functions for unit root and cointegration tests. J. Appl. Econ. 11, 601–618.
Moore, A., 2011. Demand elasticity of oil in Barbados. Energy Policy 39, 3515–3519.
Narayan, P.K., Smyth, R., 2007. A panel cointegration analysis of the demand for oil in the Middle East. Energy Policy 35, 6258–6265.
Pedregal, D.J., Dejuán, O., Gómez, N., Tobarra, M.A., 2009. Modelling demand for crude oil products in Spain. Energy Policy 37, 4417–4427.
Pesaran, M.H., Shin, R., Smyth, R., 2001. Bounds testing approaches to the analysis of level relationships. J. Appl. Econ. 16, 289–326.
Phillips, P.C.B., Perron, P., 1988. Testing for a unit root in time series regression. Biometrika 75, 335–346.
Sa’ad, S., 2009. An empirical analysis of petroleum demand for Indonesia: an application of the cointegration approach. Energy Policy 37, 4391–4396.
Sentenac-Chemin, E., 2012. Is the price effect on fuel consumption symmetric? Some evidence from an empirical study. Energy Policy 41, 59–65.
The Economist, 2016. Nigeria Petrol Subsidies: a Fuel and Your Money. May 19th edition. https://www.economist.com/news/middle-east-and-africa/21699171-petrol-prices-are-now-bit-more-realistic-will-naira-be-next-fuel-and.
World Bank, 2013. Energizing Economic Growth in Ghana: Making the Power and Petroleum Sectors Rise to the Challenge. Energy Group, World Bank, Africa Region (June).
Xiong, J., Wu, P., 2009. An analysis of forecasting model of crude oil demand based on cointegration and vector error correction model (VEC). 2008 International Seminar on Business and Information Management ISBIM 2008, pp. 485–488.
Zhao, X., Wu, Y., 2007. Determinants of China’s imports: an empirical analysis. Energy Policy 35, 4235–4246.
Ziramba, E., 2010. Price and income elasticities of crude oil import demand in South Africa: a cointegration analysis. Energy Policy 38, 7844–7849.
Author information
Authors and Affiliations
Corresponding author
Additional information
Peer review under responsibility of Afreximbank.
Rights and permissions
This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/), which permits unrestricted non-commercial use, distribution, and reproduction in any medium, provided the original work is properly cited.
About this article
Cite this article
Marbuah, G. Understanding crude oil import demand behaviour in Africa: The Ghana case. J Afr Trade 4, 75–87 (2017). https://doi.org/10.1016/j.joat.2017.11.002
Received:
Revised:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1016/j.joat.2017.11.002