FWU Journal of Social Sciences, Summer 2020, Vol.14, No.2, 14-24 An Investigation into Fuel Demand Elasticities and Economies of Scale in Pakistan Babar Aziz Government College University Lahore Zahid Iqbal Forman Christian College (A Chartered University) Lahore Azka Amin Iqra University, Karachi The study aims to investigate the consumption behavior of households towards energy items and impact of socio-economic determinants on fuel demand in Pakistan. To figure out consumer’s approachability, subject to different fuel prices and expenditure, demand elasticities are calculated by using Household Integrated Economic Survey data for the year 2015-16. The study also explores the impact of some of the crucial determinants in energy demand modeling and existence of economies of scale. Different determinants including number of earners in a household and number of rooms in a dwelling, number of durable commodities owned by a household and construction type of the house, came out to have a significant impact in determining fuel budget share of households. As the results for housing factors showed that with growing incomes and living standards, energy consumptions is going to further increase Electricity and gas are substitutes of each other and also act separately as substitute or complement of other fuels at national levels. Since all the fuels came out to be necessities, any taxation policy to reduce demand would increase the payment burden on consumers. Finally, scale economies have found in these inelastic fuel items, and they do significantly vary directly or indirectly with changes in their important determinants . Keywords: fuel demand elasticities; economies of scale; HIES data JEL classification: Q41; D12; R49 Today microeconomic outlook of energy consumption and expenditure has become the world’s most vital and dynamic aspect of economic growth and development. Fuel is essentially required to power different production processes, so its consumption is considered as lifeline for functioning of every sector in any economy. It plays an important role in determining and improving Correspondence concerning this article should be addressed to Dr. Babar Aziz, Professor, Department of Economics, Government College University Lahore, Email: babar.aziz@gcu.edu.pk Contribution of Authors: 1. The first author has envisaged the initial idea, provided theoretical framework, formulated objectives & research question, crafted policy recommendations and finalized the first draft. 2. The second author has devised methodology, analyzed the data, and infer the results. 3. The third author has reviewed the literature, collected the data, constructed variables, and incorporated the suggested revisions to finalize the draft.