Gasoline Demand in Greece: The Importance of Shifts in the Underlying Energy Demand Trend

This paper explores the relative importance of factors other than price and income in explaining gasoline demand in Greece between 1978 and 2008. Using a structural time series model (STSM) the long-run elasticities of income and price are 0.45 and -0.32, respectively. Further, it is shown using the estimated underlying energy demand trend (UEDT) that other exogenous factors have been shifting the gasoline demand curve to the right, thus reflecting more energy-intensive lifestyles in Greece. Given the results, it is contended that the kinds of policies that governments can use to manage gasoline demand and move toward sustainable transportation go beyond the usual price mechanism.