How does the activity effect affect energy consumption in Saudi industry?

Fig. 6 illustrates the decomposition results, revealing that the activity effect was the largest driver of energy consumption growth in Saudi industry. The positive values for the activity effect indicate that it consistently exertedupward pressure on energy demand.

How much energy does Saudi Arabia use?

Energy consumption data were obtained from the IEA (2018a). Fig. 1 shows that between 1986 and 2016, aggregate energy consumption in the Saudi industrial sector grew from 4.5–42.3 million tonnes of oil equivalent (Mtoe). Fig. 1 also shows the breakdown by fuel type, highlighting the dominant role that fossil fuels play. 3

What fuels are used in the industrial sector in Saudi Arabia?

The fuels used in the industrial sector in Saudi Arabia includecrude oil, diesel, heavy fuel oil, and natural gas, in addition to electricity and other refined oil products.

Why does Saudi Arabia have low energy prices?

Theabundance of oil and natural gas in Saudi Arabia has allowed the government to provide energy to the industrial sector at relatively low administered prices. These low energy prices appear to have influenced both the levels of energy efficiency in Saudi industry and its structure.

How does Saudi Arabia affect industrial energy demand?

Another important driver that often exerted upward pressure on industrial energy demand was the structure effect. Positive values reflect how Saudi Arabia’s move towards more energy-intensive manufacturing led toincreases in energy consumption over the years.

Will Saudi Arabia's energy demand continue to grow?

The long-run income elasticity suggests that Saudi Arabian industrial energy demandwill continue to grow over the coming decades as economic activity expands. The long-run price elasticity however suggests potential for mitigating some of this growth through increased energy prices.