Date of Award

12-1985

Degree Type

Thesis

University or Center

Atlanta University (AU)

Degree Name

M.A.

Department

Economics

Abstract

This thesis analyzed Georgia's pre and post embargo consumption of gasoline and residential electricity from 1960 to 1982 to determine: 1) if the structure of gasoline demand was stable; 2) to investigate the arguments for conservation; and 3) to ascertain that the pricing mechanism is indeed able to adjust consumption to levels of supply. Elasticities were computed and they were used to address simple tax issues. The study was significant for several reasons: 1) it is the first ever known study of its kind done on Georgia; 2) Georgia has a ninety five percent dependence rate on other states and foreign countries (indirectly) for her supply of energy resources; 3) the impact of the oil embargo on consumption, prices and the economy at large is necessary both as a post moterm and for future policy decisions. The results overwhelmingly favored stability in the structure of these demands. As such, the restricted model was valid for any projections and conclusions. The short-term price and income elasticities for gasoline were .30 and .06 and the long-term coefficients were 1.5 and .20 respectively. For electricity, the short-term price and income elasticities were .22 and .37 and the long-term estimates were .81 and 1.33 respectively. The weather variables were very inelastic. All coefficients were significant by the usual criteria. With inelastic demands for these energy resources, taxation seemed a welcome proposition for controlling prices and consumption and for generating revenue. However, it is only to the extent that other monetary, fiscal and economic objectives of the government are not jeopardized. Thus, the arguments for conservation holds to a good degree. A hybrid of a comprehensive tax-pricing policy and conservation efforts is necessary for stability in the energy sector.

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