Abstract: Natural gas imports in China has been increasing quickly, reflecting a shortage of natural gas supply. I argue that China’s natural gas production is demand driven but not energy price-orientated. Hence, this paper primarily aims to examine if energy prices have influenced natural gas production. Monthly data spanned 2011-2017. Fuel and power price index was used to represent energy prices. CPI was taken into account. The Phillips-Perron test, the augmented Dickey-Fuller test, the Dickey-Fuller generalised-squared test suggested a unit root for three variables. Cointegration did not exist. A conventional vector-autoregression model in first differences was estimated. No Granger causal relationships were suggested. The study suggests that natural gas production in China is rarely impacted by energy prices and CPI and vice versa in the short run as well as in the long run. Increasing demand for natural gas leads to the gas supply shortage, which has encouraged the governmental control on the production. Empirical evidence shows that gas production may not be market-orientated.
Keywords: Natural gas, production, price, demand, long term, short term.
Title: Natural Gas Production and Energy Prices in China
Author: Gaolu Zou
International Journal of Social Science and Humanities Research
ISSN 2348-3156 (Print), ISSN 2348-3164 (online)
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