This paper first analyses price and income elasticity of oil demand in the United States, Canada and Mexico for the period 1980‐99. Economic activity is the main driving force that influences oil consumption in each country. Changes in oil consumption generally lagged by a few years before the full impact of changes in oil prices was realized. Consumers in the short run are constrained by technological and other barriers and, therefore, less sensitive to changes in oil prices; however, they are more responsive in the long run — though response is still inelastic. The use of advanced technology facilitated these countries to use less oil over time. The paper then looks at demand over the next 20 years. The best‐fitting model predicts that, by the end of 2020 (reference case), the USA, Canada and Mexico will respectively consume 24,900, 2,596 and 2,321 thousand barrels daily, compared with 19,519, 1,943 and 1,970 thousand b/d in 1999. The model forecasts economic slowdown during 2000/2002. The USA and Canada are expected to recover quickly, while Mexico will take longer.
No takes yet. Share an insight, caveat, or question.
Salman Saif Ghouri (2001) studied this question.