The production and consumption of oil in Africa: The environmental implications

Abstract

In this paper, we examine the role of crude oil production and domestic oil consumption on the environmental quality in Africa. To achieve this objective, we employ feasible generalized least square (FGLS), fixed effect with Driscoll-Kraay standard errors (FE-DSE), and fully modified ordinary least square (FMOLS) on 4 top economies and oil-producing African countries between 1990 and 2018. Consistent with the positive environmental externality theory, we found that crude oil production improves the environmental quality in the long-run and short-run. On the contrary, domestic oil consumption negatively affects the environment, only in the short-run. Furthermore, we found that environmental treaties strongly influence the impact of oil production and consumption on environmental quality. Therefore, we suggested that renewable energy sources should be embraced by promoting investment in renewable energy.