Industrial Process Models

While application of the econometric approach outlined in the previous sections can give a general indication of how energy demand will evolve in response to fuel prices, it should be noted that this response cannot be stated in terms of specific technological changes, even though it is recognized that for a change in energy demand to occur, some change or modification to production technology must take place. Indeed, proponents of the econometric approach would argue that this is one of the advantages of the approach, in that the effect of technologies yet to be developed can be taken into account (without actually defining them). Of course, for this to be valid, one must suppose that the type of technological response induced by the price changes in the historical period that is subject to the econometric estimation will continue into the future.