Does oil price volatility and financial expenditures of the oil industry influence energy generation intensity? Implications for clean energy acquisition

Abstract

This study examines the nexus between financial expenditures within the Chinese oil business, the volatility of oil prices, and the energy-generating sector. This research examines Chinese oil and energy industry statistics from 1980 to 2020, drawing upon resource curse and energy transition theories. The results of this study are generated by using correlation analysis, quantile process estimation, autoregressive distributed lag (ARDL), and sensitivity analysis. The nexus among variables is seen across all quantiles, ranging from 22% to 81%. On the contrary, a negative association exists between oil price volatility and industrial financial expenditures, with the magnitude of the correlation ranging from 19% to 90%. Significantly, these connections exhibit statistical significance in short-term and long-term scenarios. This paper proposes implications to enhance financial expenditures in the Chinese oil business. These strategies include diversification, hedging via futures contracts and swaps, and short-term forecasts of oil price movements.