The dynamics of United Kingdom regional energy demand

Differences in regional energy-elasticities may be caused by relative differences in primary energy sources and endowments but they may also arise from differences in economic structure and/or consumption behaviour. This paper examines some long-run energy demand relationships across three sectors - domestic, industrial/commercial and transport in Scotland, Northern Ireland and the United Kingdom as a whole. The use of cointegration and error correction techniques uncovers differences in dynamic response between the energy-rich Scottish region and the energy-poor Northern Ireland region. There are significantly lower short-run price-elasticities in all sectors in Northern Ireland than in Scotland and the United Kingdom overall, whereas the income-elasticities in the energy-poor region are larger.