The rise of green energy metal: Could lithium threaten the status of oil?

Abstract

Exploring the connectedness and time-varying attributes of conventional and new energy markets is crucial to the green-oriented transition of energy. This investigation performs bootstrap full-and sub-sample techniques to explore the correlation between the oil and lithium markets, and further probe whether lithium could threaten the status of oil. The empirical outcomes reveal that oil price (OP) exerts positive influences on lithium price (LP). High OP increases the lithium demand and its price through taking new energy vehicles as substitutes for conventional automobiles, indicating that lithium may threaten the status of oil under the oil bull market. But the above opinion could not be supported under the oil bear market, low OP lessens the attraction of new energy vehicles and then reduces lithium demand and LP. In turn, low LP negatively affects OP since oil is also a vital engine for economic development. Thus, these outcomes are consistent with the price correlation model, and lithium can only partially replace oil as a vehicle fuel under certain situations, the latter's status could not be threatened completely. Against a backdrop of urgent green transition and potential oil and lithium bubbles, these conclusions bring meaningful inspirations to the public, enterprises and countries.