Initially, the Johansen procedure (Johansen [15]) was used to identify cointegration vectors between logs of fossil fuel intensity (demand per unit GDP) and a weighted average real fuel price. Generally four lags were included in the VAR, corresponding to the quarterly data, although some countries re- quired up to eight to give a good result. A time trend was also included as a proxy for technical progress and structural change, by regressing the cointegrating vector on a time variable using OLS. The cointegrating vector together with the time trend gives a long run relationship between energy de- mand, GDP and price (1).