Use of the Daily Temperature Method to Estimate the Demand for Natural Gas in Iran's Domestic Sector: Using the Panel Data Approach

The impact of climate changes on demand for energy at the household level and its likely negative environmental impacts have preoccupied policy makers. Different countries have adopted a range of measures to deal with this phenomenon. One of the effective policies adopted by Iran to reduce air pollution has been the replacement of oil derivatives by natural gas for residential purposes, even though the move to natural gas was driven more by the need to economize on local consumption of oil in order to increase oil exports. Since transport and storage of natural gas is a costly affair, this study attempts to identify the components of home demand for natural gas that is sensitive to temperature changes and that which is independent of this factor, in order to better assess peak demand as compared to underlying demand. The study provides a system for estimating changes in demand for natural gas in different provinces in order to better plan the expansion of the gas pipeline and optimal levels of reserves to deal with expected peak demand.