A Cross-Sectional Study of Household Income as a Determinant of Natural Gas Consumption

Abstract

The contention that low income consumers are harmed by natural gas rates that include high fixed monthly charges and low consumption charges assumes that household gas consumption is a monotonically increasing function of income. This notion is tested using data on household gas consumption, housing characteristics, and demographics, for St. Louis, Missouri. The results indicate that the income elasticity is negative at low income levels, becoming positive at an annual household income of approximately $35,000. House size, age, and the number of occupants are positively related to gas consumption, while owning (rather than renting) the home is negatively related. (K23, L95, Q41)