Revue internationale des sciences économiques et de gestion

Investigation of Energy Consumption, Energy Price and Income in Iran in the Long-Term

Abstract

Hamed Najafi and Ghasem Nikjou

Economic activities in the present world has influenced by energy consumption and increasing in its effectiveness. Generally energy is providing from the exhaustible resources now, thus saving is important in order to conservation. However, identifying factors affecting energy consumption in the short-term and long-term is much important to achieve this goal. In present study we examine the relationship between energy consumption and its price and household income over the period 1971-2008 in Iran. We applied the Johanson-Juselius convergence method to check the possible convergence. Present results indicate positive relationship between household income and energy consumption on one hand and negative relationship between energy price and its consumption on other hand in long-term. And because of energy demand sensitivity to price, government is able to prevent non-optimum using with some policies such as energy taxes or increasing in energy price by eliminating of subsidies.