Energy demand in the transportation sector of Mexico

This paper report results of an analysis of the demand for energy in the Mexican transport sectors, focusing on the railroad, air transport and motor vehicle modes. The approach is an econometric one with emphasis placed on the structure for each mode. For two of the modes a two-stage approach is employed where in the first stage demands for services from the particular mode are modeled, and in the second stage demand is treated as a derived demand from these transport services. For the motor vehicle mode, gasoline demand is considered as the product of gasoline consumption per vehicle times the total number of vehicles, and then these components are related to economic and structural variables. Diesel demand of motor vehicles is modeled in a more reduced from approach. The principal finding is that changes in income play a more important role in affecting energy demand than do changes in energy prices, especially in the railroad and air transport sectors. For the gasoline and diesel fuel demand in the monitor vehicle sector, however, price is of substantial importance.