Are fluctuations in oil consumption permanent or transitory? Evidence from linear and nonlinear unit root tests

Abstract

This paper examines the integration properties of the total oil consumption in 57 countries for the period of 1965–2012. A combination of new and powerful linear and nonlinear stationarity tests are employed to achieve the objectives of the study. We find that the oil consumption series in 21 countries follow a nonlinearity path while those in the other countries are linear in nature. Evidence of the presence of a unit root is found for the total oil consumption series in 38 countries while the series is stationary in the remaining 19 countries. An important insight is that the blueprints that were designed to reduce oil consumption are likely to have a permanent effect in most of the countries.