| Household consumption of energy in all forms is one of the principal determinants of total energy use in the United States. As energy conservation has become a national priority, disagreement, however, about whether people are willing or are able to adjust their fuel-use habits to any great extent. Some economists believe households are "locked-in" to a set of appliance and heating sytems, unable to greatly alter fuel use, especially in the short run. The incentive, however, to improve fuel-use efficiency has been reinforced by increases in the real prices of fuels.;The first objective of the study is to compare the willingness of two groups of consumers to adjust to very different changes in their heating costs over similar periods of time. This is done by comparing the survey responses and fuel demand relationships of a sample of households which used two different fuels for space heating. Second, the study examines the roles of various structural characteristics of the houses as well as socio-economic influences in determining fuel consumption within the homes. The analytic framework is derived from the household production function approach to demand modelling. While heating fuel is the primary market good in residential space heating, many of the structural characteristics of the house are believed to provide production-like substitution possibilities for fuel use in home heating.;The household's demand for fuel is shown to be a derived input demand, a function of these structural characteristics, as well as the more traditional variables. Unfortunately, due to the lack of cross-sectional variation in prices, the direct estimation of fuel price elasticities is not addressed. Multiple regression analysis is used to test for differences across households and for changes over time.;The results of the cross-section estimations indicated that characteristics in both the structural and socio-economic categories contribute to the variation in fuel use. About half the variation is explained. The trend in the use and effectiveness of conservation measures over time suggests that consumers are willing to adjust fuel-use habits in the short- and long-run but that a substantial economic incentive is required to create and sustain a significant response.;Finally, the estimated fuel savings for several conservation measures are estimated and converted to payback periods. The econometrically-derived fuel savings rates using the household data are nearly identical to engineering studies of the same conservation techniques, using closely monitored test houses. The payback periods calculated using the engineering approach, however, are consistently shorter than those derived from the econometric approach, suggesting that the adaptation of the engineering studies to a more generally useable set of household-specific rules appears to have introduced considerable bias into the projected fuel savings. |
