December 1999 © 1999 Organization of the Petroleum Exporting Countries 293 Household energy demand in Kuwait: an integrated two-level approach M. Nagy Eltony and Mohammad Hajeeh Abstract This paper models and estimates energy demand by the household sector using the top-down or the two-level approach. The discussion has been developed to include a breakdown of household consump- tion by fuel type. It also simulates the developed model under three scenarios and presents an analysis of the results. The empirical results indicate that short- and long-run energy consumption and the level of economic activity are interrelated. The model simulation shows that energy consumption varies directly with economic growth. It also illustrates that an increase of 100 per cent in all nominal energy prices will lead to a reduction in household energy demand of 28 per cent by the year 2010. The simulation re- sults clearly demonstrate that the potential for energy conservation exists in Kuwait in the household sector and particularly in the con- sumption of electricity. Moreover, fuel-switching will be in favour of oil products only when energy prices increase substantially, as in the case of the extreme scenario.