Analyzing Regulatory Impacts on Household Natural Gas Consumption: The Case of the Western Region of Ukraine

Abstract

In this study, we analyzed the impact of government regulatory institutions on households’ natural gas use behavior and suggested that the conventional view of natural gas as a social utility is inappropriate. Pursuing this goal, we applied correlation analysis, regression analysis and the Granger causality test to assess the statistically significant impact of particular factors (environmental temperature, price and tariff on natural gas) on household gas consumption. Our study was based on the data on household gas consumption in 2019–2022. Ultimately, the lowest rate of influence was recorded by the Granger causality test (2.47%), compared to 6.88% in the test for the significance of the correlation coefficient and 9.23% in the t-test for the statistical significance of the regression coefficients. One has to note that the Granger causality test used in our study is considered the most sensitive model for analyzing economic data. Using statistical methods, we concluded that regulatory factors have a negligible impact on the volume of natural gas consumption by households. Our results suggest that the Ukrainian regulatory authorities should be cautious about using non-market mechanisms, such as price caps, in the energy sector.