Residential natural gas price affordability analysis–A case study of Beijing

In recent years, the demand for natural gas has shown strong growth in China. However, the relative lack of domestic natural gas resources and dependence on gas imports have resulted in rising natural gas prices. In order to ensure market order, the natural gas pricing mechanism must be closely linked to customer affordability. The objective of this paper is to analyse natural gas prices’ economic and psychological affordability for Beijingʹs residents by the income-expenditure elasticity model and the equivalent heating value method, and further to evaluate the comprehensive affordability of the natural gas price by the small-taking and interval-number methods. Finally, it provides some suggestions for the formulation of Beijingʹs residential natural gas prices.