We see that the Sales of Natural Gas is dependent on various factors such as

price of natural gas, prices of alternative fuels, exchange rate prevailing,

construction index of the downstream industry etc. Further sales also varies with
month e.g. in festive seasons plant is shut down hence it affects sales of natural
gas.
To develop a regression model, we begin by including all the predictors which
affect sales. Gradually we proceed to models by rejecting some predictors which
affect other predictors more than they affect sales of natural gas (response
variable). We finally reach to our final model which explains how sales will
change as the predictors change. Further we made sure to remove multicollinearity, if any, between the predictors.

> summary(model3)
Call:
lm(formula = Overall.Industry.sales ~ Construction.GDP + Price.of.Light.Diesel.Oil +
Exchange.rate.previous.month + Construction.Indices + factor(Problem.Month),
data = ngd)
Residuals:
Min
1Q Median
3Q
Max
-11.9978 -2.9562 -0.5018 3.3431 11.3658
Coefficients:
Estimate Std. Error t value Pr(>|t|)
(Intercept)
161.08248 24.71411 6.518 1.86e-06 ***
Construction.GDP
-0.03780 0.03152 -1.199 0.243780
Price.of.Light.Diesel.Oil
1.60654 0.74033 2.170 0.041623 *
Exchange.rate.previous.month 1.40146 0.56050 2.500 0.020761 *
Construction.Indices
-1.22654 0.26759 -4.584 0.000161 ***
factor(Problem.Month)1
-10.65135 3.58344 -2.972 0.007266 **
--Signif. codes: 0 *** 0.001 ** 0.01 * 0.05 . 0.1 1
Residual standard error: 5.932 on 21 degrees of freedom
Multiple R-squared: 0.7216,
Adjusted R-squared: 0.6553
F-statistic: 10.89 on 5 and 21 DF, p-value: 2.876e-05
> vif(model3)
Construction.GDP Price.of.Light.Diesel.Oil Exchange.rate.previous.month
3.253469
2.025532
3.843513
Construction.Indices
factor(Problem.Month)
3.514225
1.243415

===========================================================================
=======> summary(model2)
Call:
lm(formula = Overall.Industry.sales ~ Price.of.Furnace.Oil +
Price.of.Light.Diesel.Oil + factor(Problem.Month) + Exchange.rate.previous.month +

Construction.Indices + Construction.GDP, data = ngd)

Residuals:
Min
1Q Median
3Q
Max
-7.3353 -3.4516 -0.4015 2.3067 10.7983
Coefficients:
Estimate Std. Error t value Pr(>|t|)
(Intercept)
171.80231 22.64591 7.586 2.62e-07 ***
Price.of.Furnace.Oil
-3.64848 1.49148 -2.446 0.02381 *
Price.of.Light.Diesel.Oil
4.91633 1.50787 3.260 0.00392 **
factor(Problem.Month)1
-9.08508 3.28451 -2.766 0.01192 *
Exchange.rate.previous.month 2.05811 0.57093 3.605 0.00177 **
Construction.Indices
-2.08766 0.42637 -4.896 8.72e-05 ***
Construction.GDP
0.02563 0.03841 0.667 0.51222
--Signif. codes: 0 *** 0.001 ** 0.01 * 0.05 . 0.1 1
Residual standard error: 5.333 on 20 degrees of freedom
Multiple R-squared: 0.7857,
Adjusted R-squared: 0.7215
F-statistic: 12.22 on 6 and 20 DF, p-value: 8.731e-06
> vif(model2)
Price.of.Furnace.Oil Price.of.Light.Diesel.Oil
factor(Problem.Month)
12.073895
10.396771
1.292534
Exchange.rate.previous.month
Construction.Indices
Construction.GDP
4.934316
11.039211
5.977956

===========================================================================
======= summary(model1)
Call:
lm(formula = Overall.Industry.sales ~ ., data = ngd)
Residuals:
Min
1Q Median
3Q
Max
-6.5670 -2.9980 0.0701 3.3486 7.8138
Coefficients:
Estimate Std. Error t value Pr(>|t|)
(Intercept)
85.88113 39.66632 2.165 0.043317 *
Price.of.Furnace.Oil
-2.07046 1.46673 -1.412 0.174229
Price.of.Light.Diesel.Oil
3.16451 1.51053 2.095 0.049808 *
Price.of.Natural.gas
-2.50096 0.99491 -2.514 0.021119 *
Exchange.rate.previous.month 3.52109 0.77214 4.560 0.000214 ***
Problem.Month1
-9.49978 2.92385 -3.249 0.004223 **
Construction.GDP
0.02463 0.03414 0.721 0.479491
Construction.Indices
-1.35795 0.47735 -2.845 0.010361 *
--Signif. codes: 0 *** 0.001 ** 0.01 * 0.05 . 0.1 1
Residual standard error: 4.74 on 19 degrees of freedom
Multiple R-squared: 0.8392,
Adjusted R-squared: 0.78
F-statistic: 14.17 on 7 and 19 DF, p-value: 2.474e-06
vif(model1)

Price.of.Furnace.Oil Price.of.Light.Diesel.Oil
Price.of.Natural.gas
14.781633
13.208208
21.217310
Exchange.rate.previous.month
Problem.Month
Construction.GDP
11.425433
1.296662
5.978775
Construction.Indices
17.517264

cor(xymat)
Overall.Industry.sales Price.of.Natural.gas Price.of.Furnace.Oil
Overall.Industry.sales
1.00000000
-0.3222288
0.2722546
Price.of.Natural.gas
-0.32222882
1.0000000
0.5476639
Price.of.Furnace.Oil
0.27225457
0.5476639
1.0000000
Price.of.Light.Diesel.Oil
0.15615765
0.6407794
0.8626762
Exchange.rate.previous.month
-0.07713708
0.9409466
0.6371646
Problem.Month
-0.30145718
-0.1046645
-0.1195980
Construction.GDP
-0.29426622
0.8162618
0.5040496
Construction.Indices
-0.51053881
0.8772510
0.2816683
Price.of.Light.Diesel.Oil Exchange.rate.previous.month Problem.Month
Overall.Industry.sales
0.15615765
-0.07713708 -0.30145718
Price.of.Natural.gas
0.64077940
0.94094662 -0.10466449
Price.of.Furnace.Oil
0.86267622
0.63716458 -0.11959802
Price.of.Light.Diesel.Oil
1.00000000
0.72295682 -0.08775713
Exchange.rate.previous.month
0.72295682
1.00000000
-0.07508164
Problem.Month
-0.08775713
-0.07508164 1.00000000
Construction.GDP
0.51504544
0.72749111 -0.29852129
Construction.Indices
0.54346872
0.78438751 -0.07044044
Construction.GDP Construction.Indices
Overall.Industry.sales
-0.2942662
-0.51053881
Price.of.Natural.gas
0.8162618
0.87725095
Price.of.Furnace.Oil
0.5040496
0.28166830
Price.of.Light.Diesel.Oil
0.5150454
0.54346872
Exchange.rate.previous.month
0.7274911
0.78438751
Problem.Month
-0.2985213
-0.07044044
Construction.GDP
1.0000000
0.78258416
Construction.Indices
0.7825842
1.00000000