Demand for non-energy petroleum products: The case of Québec

Non-energy petroleum products (NEPP) refer to petroleum products which, once refined, are used either as final goods or as intermediate inputs for other non-energy producing processes. They fall into five categories: petrochemical feedstocks, asphalt, petroleum coke, lubricating oil/greases and naphtha specialties. While being of some significance, they have received little attention in previous petroleum demand studies. The heterogeneous nature of the products may be part of the explanation for the lack of interest. The main results of the econometric analysis are: first, all own-price elasticities except for petroleum coke are quite low, that is, less than one in absolute value. Second, asphalt, petroleum coke, and lubes/greases display income elasticities which are close to one while petrochemical feedstocks has an output elasticity above one and income appears to play no role in explaining the demand for naphtha specialties. Finally, petrochemical feedstocks are a statistically significant substitute for capital and energy, but not for labour, in the Québec chemical industry.