Increase In Crude Oil Prices Research Articles

Oil price, energy consumption and carbon dioxide (CO2) emissions: insight into sustainability challenges in Venezuela

This study provides insight into sustainability challenges in Venezuela by exploring the causal interactions between oil price, energy consumption and carbon dioxide (CO2) emissions in Venezuela. Economic growth, government consumption expenditure and trade openness are included as additional determinants in the analysis. The auto-regressive distributed lag (ARDL) bounds approach to cointegration provides evidence of long-run relationship between the variables with the incorporation of structural breaks observed in the series. The estimates suggest that an increase in crude oil price significantly increases energy consumption, government consumption expenditure and energy consumption generate CO2 emissions, and CO2 emissions exert negative effects on economic growth in the oil-rich economy. This study further examined the direction of causality between the variables using the innovative accounting approach (IAA). The results suggest that crude oil price causes energy consumption in the economy. No significant causal relationship is found between energy consumption and economic growth. Energy consumption causes CO2 emissions in the economy. In addition, a unidirectional causality runs from CO2 emissions to economic growth. The response of economic growth to CO2 emissions indicates that more CO2 emissions in the economy would exert negative effects on economic growth. It is, therefore, expected that policy makers would consider energy diversification as a major component of economic diversification policies in Venezuela.

Attention Matters: An Exploration of Relationship Between Google Search Behaviors and Crude Oil Prices

Extant studies have suggested that Google search volume data can serve as a new and direct measure of investor attention in various research fields such as economy, financial and energy markets. However, it is not clear that whether investor attention influences prices in the same direction in different market states (prices increase or decrease). In this paper, the authors propose a measure of speculative attention, demonstrate its advantages by comparing it with several existing ones, and then adopt a Markov switching autoregressive model and an EGARCH model to examine its influences on crude oil prices in two market states. It is argued that the responses of crude oil prices to investor attention are asymmetrical in the two states of crude oil prices. The empirical study shows that one increase in searches causes a significant positive increase in crude oil prices during oil price surges, and a more significant reduction of prices during oil price collapses. The authors also conduct robustness checks by limiting the sample periods and using other measures, and the results support the asymmetric effect of web search behaviors on crude oil prices.

Empirical Analysis of Crude Oil Price Effects on Exchange Rate Volatility

This study examined the effects of crude oil price on nominal exchange rate volatility for oil and non-oil exporting countries. Immediately after the global financial crisis, the swings in the movement of crude oil price revealed how vulnerable the currencies of oil exporting countries and other commodity exporting countries. Using the Structural VAR method and the sample data from 2011 to 2016, the study estimated the effects of crude oil price on exchange rate stability and its impulse responses. Empirical results show that exchange rates for oil exporting countries are highly vulnerable to crude oil price shocks. As crude oil price declines, exchange rate volatility increases, similarly large crude oil price increases are associated with low exchange rate volatility. Currencies such as Angolan Kwanza, Russian Ruble, and Mexican Peso are very sensitive to crude oil price shocks. SVAR results show that oil price shocks significantly reduce exchange rate volatility of oil exporting countries. Meanwhile, the exchange rate volatility for non-oil exporting countries was driven by other factors than the price of crude oil.

Social and economic drivers of national economic development: the case of OPEC countries

This paper examines the economic relationships between oil price volatility and socially-economic development of 14 Organization of the Petroleum Exporting Countries (OPEC) using the annual panel data for the period 1990–2014 obtained from the World Bank (WB) statistical data sets. Hausman specification test has been performed to choose the method of panel data analysis, and the results were in favor of fixed effects estimation. The main findings indicate the direct relationship between economic growth and oil price volatility. The research supports the hypothesis that an increase in crude oil prices is positively related to GDP, and a 10% increase in oil prices correlates with 0.6-4% GDP improvements. Structural changes in employment in favor of service sector are negatively correlated with GDP per capita. Changes in GDP structure in favor of oil rents on 10% lead to the shrinking of GDP on 1%. Life expectancy at birth, as an indirect indicator of health, positively influences the economic growth indicators and an improvement in life expectancy on one percentage leads on average to 1% growth in GDP and 0.5-1.33% growth in GDP per capita. Energy efficiency improvements are positive drivers of GDP values at OPEC, and our findings suggest that a 10% increase at GDP per unit of energy use leads to 3% increase of GDP itself. The study recommends investing in energy efficiency, human capital, and capital formation to guarantee long-run economic development and prosperity of OPEC counties.

Analysis of Interaction between Global Crude Oil Price, Exchange Rate, Inflation and Stock Market in India:Vector Auto Regression Approach

The present paper analyses the association between global crude oil price, exchange rate, inflation and stock market in Indian economic scenario. The paper employs Vector Auto Regression Model on monthly data from April 2001 to March 2017. The monthly data has been sourced from official website of Energy Information Agency (EIA), Reserve Bank of India (RBI) and Bombay Stock Exchange (BSE). The analysis reveals the variables being integrated of Order I (1) and negates the possible existence of long run relationship among them. The analysis shows the negative relationship between stock index and inflation and positive association with exchange rate and WTI crude oil price. The paper also indicates the indicates the WTI crude oil price increase cause increase in inflation and exchange rate depreciation. Although the increase in WTI crude oil price has a favourable impact on BSE Index, the paper necessitates the need of decrease in reliance upon crude oil price so as to curb the increase in inflation and exchange rate depreciation. The policymakers need to devise policies to keep control on the increase in inflation and conserve the foreign exchange.

Global scenarios for fuel oil utilisation under new sulphur and carbon regulations

AbstractFuel oil is an important derivative of crude oil used mainly in marine transport and power generation. The environmental impact of this important energy vector continues to be a major challenge due to its high sulphur and carbon content. In this work, we analyse the impact of sulphur cap and CO2 price on the inter‐competition between fuel oil and alternative low‐sulphur low‐carbon fuels. It was found that the increase in crude oil prices enhances the cost‐effectiveness of using middle distillates compared to using fuel oil with scrubbing systems. In addition, we found that imposing a CO2 price between $50–150/TonCO2 leads to reducing the emissions from fuel oil combustion by up to 87 per cent by 2040. In comparison with previous literature, we show that fuel oil will represent at least 56 per cent by 2030, under the low oil price scenario, if scrubbing systems are implemented in the shipping industry.

Assessing Interdependencies Between Food and Energy Prices: The Case of Biodiesel in Germany

The paper aims to analyse the relationship between energy prices (biodiesel, crude oil) and food commodities - vegetable oils used also as feedstock for biodiesel production. The econometric technique of price transmission, such as unit root test, cointegration test and vector error correction model, is applied to assess the interdependencies between energy prices and vegetable oil prices in Germany. Results suggest close price linkages between prices of vegetable oils and biodiesel and confirm that the vegetable oil prices drive the price dynamics of biodiesel. However, the simultaneous relationship is only revealed between biodiesel and soybean oil prices. The increase in crude oil prices is found to lead to an upward trend in the vegetable oils used for biodiesel production, thus influencing biodiesel prices as well.

Assessing Interdependencies Between Food and Energy Prices: The Case of Biodiesel in Germany

The paper aims to analyse the relationship between energy prices (biodiesel, crude oil) and food commodities - vegetable oils used also as feedstock for biodiesel production. The econometric technique of price transmission, such as unit root test, cointegration test and vector error correction model, is applied to assess the interdependencies between energy prices and vegetable oil prices in Germany. Results suggest close price linkages between prices of vegetable oils and biodiesel and confirm that the vegetable oil prices drive the price dynamics of biodiesel. However, the simultaneous relationship is only revealed between biodiesel and soybean oil prices. The increase in crude oil prices is found to lead to an upward trend in the vegetable oils used for biodiesel production, thus influencing biodiesel prices as well.

Dynamic fuel price pass-through: Evidence from a new global retail fuel price database

We estimate the dynamic effects of crude oil price shocks on retail fuel prices, the pass-through, using the local projection approach of Jordà (2005). Using a novel monthly dataset of retail fuel prices in 162 countries over the period from 2000:1 to 2014:12, we find that: (i) retail gasoline prices respond positively to crude oil price shocks, but the responses vary across regions and income groups; (ii) there is also some variation across country groups in the persistence of the effects of crude oil price shocks on retail gasoline prices; and (iii) declines in crude oil prices lead to smaller effects on retail gasoline prices than increases in crude oil prices, pointing to an asymmetry in the fuel price pass-through.

Cyclical comovements in energy-related venture capital investments

ABSTRACTThis article examines the cyclical comovements of venture capital investments in the energy sector and key macroeconomic variables. In particular, we decompose the cyclical component of two venture capital investment series (clean technology and industrial/energy) and several macroeconomic factors including oil prices. A number of important cyclical relationships are documented such as increases in crude oil prices tend to signal future venture capital investment in both energy-related sectors and these investments tend to move concurrently with movements in the overall economy

Dynamic Fuel Price Pass-Through: Evidence from a New Global Retail Fuel Price Database

This paper assesses the dynamic pass-through of crude oil price shocks to retail fuel prices using a novel database on monthly retail fuel prices for 162 countries. The impulse response functions suggest that on average, a one cent increase in crude oil prices per liter translates into a 1.2 cent increase in the retail gasoline price at peak level six months after the shock. However, the estimates vary significantly across country groups, ranging from about 0.5 cent in MENA countries to two cents in advanced economies. The results also show that positive oil price shocks have a larger impact than negative price shocks on the retail gasoline price. Finally, the paper underscores the importance of the new dataset in refining estimates of the fiscal cost of incomplete pass-through.

Dynamic Fuel Price Pass-Through: Evidence from a New Global Retail Fuel Price Database

This paper assesses the dynamic pass-through of crude oil price shocks to retail fuel prices using a novel database on monthly retail fuel prices for 162 countries. The impulse response functions suggest that on average, a one cent increase in crude oil prices per liter translates into a 1.2 cent increase in the retail gasoline price at peak level six months after the shock. However, the estimates vary significantly across country groups, ranging from about 0.5 cent in MENA countries to two cents in advanced economies. The results also show that positive oil price shocks have a larger impact than negative price shocks on the retail gasoline price. Finally, the paper underscores the importance of the new dataset in refining estimates of the fiscal cost of incomplete pass-through.

Asymmetric evidence of gasoline price responses in France: A Markov-switching approach

It has been documented that retail gasoline prices respond more quickly to increases in wholesale prices than they do to decreases in wholesale prices. However, there is little empirical evidence that identifies the link between the pass-through of oil prices to gasoline in different volatility regimes. Using a Markov-switching model on weekly observations of fuel prices from 1990 to 2011, we find that fuel prices respond significantly faster to increases in crude oil prices than to decreases in crude oil prices. However, when volatility is low, the transmittal of a price change from crude oil to retail fuel is higher compared to periods of high volatility. These results provide important information on the behavior of retailers. The findings of this paper therefore provide clues for better understanding the recent dynamics of fuel prices and some policy implications.

Retail and wholesale gasoline price adjustments in response to oil price changes

This research examines the long-run relationship between the spot oil price and retail and wholesale gasoline prices. Recent research suggests that the response of the retail gasoline price is faster and the size of the change is larger, in magnitude, following a crude oil price increase compared with periods when the crude oil price is falling; however, some recent papers examining potential asymmetries present mixed results. Our results from a common threshold model estimating the adjustment of gasoline prices and the spot oil price suggest a long-run relationship between retail and wholesale gasoline prices and the crude oil price. Further, results here suggest that both retail and wholesale gasoline prices respond symmetrically to an oil price shock in the long run, indicating little market power by gas stations and wholesalers.

Impact of Consumption and Cost Forecasting on United States Defense Fuel Budgeting

Between 2000 and 2011, Department of Defense (DOD) annual fuel expenditures were between $1 and $9 billion higher than budget estimates (excluding 2009, when DOD underestimated fuel expenditures). Fuel budget variance is generally attributed to increasing fuel prices. However, DOD fuel expenditures are driven by two parameters—the unit cost of fuel and the amount of fuel consumed. Cost variance was responsible for 80 percent of the fuel budget variance on average. Crude oil price increase drove most of this cost variance. Consumption variance was responsible for the remainder of the fuel budget variance, and was particularly important during initial wartime operations in Afghanistan and Iraq. Consumption variance was driven by DOD's planned use of emergency rather than base appropriations to pay for overseas contingency operations. Both increasing fuel prices and reliance on emergency appropriations puts defense operations at risk and increases costs to taxpayers. Improvements to current planning, budgeting, and financing practices are needed to manage this risk.

Zimbabwe Stock Exchange (“ZSE”)’s Exposure to Global Crude Oil Price Volatility

The major aim of this paper is to investigate Zimbabwe’s Stock Exchange indices’ exposure to global oil price volatility for the period 2009-2012.To determine the relationship between volatility of crude oil returns and volatility of stock returns of the ZSE indices using econometric GARCH models. Also to investigate the correlation of the global oil price in the form of Brent Crude oil prices index and Western Texas Intermediate (WTI) oil prices index with ZSE Industrial Index and the ZSE Mining index between 2009 and 2012. A GARCH approach is employed to analyse data from ZSE and Chicago Mercantile Exchange, OPEC and Datastream® Data. Daily data for crude oil prices and Zimbabwe stock exchange indices were collected for the period 2009-2012 and analysed. The variables of the Zimbabwe stock exchange are ZSE Industrial Index; and ZSE Mining index. Variables on Crude oil prices comprised of Western Texas Intermediate (“WTI”) spot prices index; Original Research Article Chiwanza et al.; BJEMT, 6(1): 22-37, 2015; Article no.BJEMT.2015.040 23 and Brent Crude oil spot prices index. Returns of stock on all the four indices were calculated. It was assumed that returns on stocks would mirror stock price movements. Volatility of returns on ZSE industrial index was very low with standard deviations ranging between -.01 to +.01. Volatility of returns on the ZSE Mining index was significant relative to the industrial index with standard between-0.1 to -0.1. Volatility of stock returns on Brent Crude spot price index was very high with standard deviations ranging between -0.6 to +0.6, while stock returns on Western Texas Intermediate (“WTI”) spot prices index displayed high volatility, standard deviations ranged from 0.1 to +0.1. Standard deviation indicates the level of dispersion from the the mean. GARCH coefficients indicated that the mean of stock returns as represented by were generally negative for the two domestic stock indices while the means of global oil stock returns were positive. Parameters ∝ and of the four indices were statistically significant. The coefficients of all the indices were highly significant ranging between 0.6300 to 0.9300 indicating that volatility was persistent in the period under investigation and that volatility was to a large extend driven by the prices and values of the previous time period (past performance).There was a positive correlation between industrial index and Brent crude with a correlation coefficient of 0.505 as well as a positive correlation between the ZSE Industrial index and the WTI oil price index with a coefficient of 0.520. There was a negative correlation coefficient of -0.332 between the Mining index and the global Brent crude oil prices as well as a negative correlation coefficient of -0.201 between Mining index and WTI Crude. The results of the study confirmed the hypothesis that the ZSE stock markets are indeed exposed to significant exogenous risks emanating from rising global crude oil price movements. There are however, moderating factors as the standard deviations on ZSE stock returns are much lower compared to standard deviations of stock returns on the global oil indices. Also the correlation coefficients are on the low side. Increases in crude oil prices have the potential to subdue any favourable factors to share price increases.

Are unleaded gasoline and diesel price adjustments symmetric? A comparison of the four largest EU retail fuel markets

The purpose of this paper is to examine the nature of price adjustments in the gasoline markets of Germany, France, Italy and Spain. We examine whether crude oil prices are transmitted to the retail gasoline prices in the short and long run and we test the symmetry of price adjustments hypothesis. An Error Correction Model, which accounts for possible asymmetric adjustment behavior, is applied for the estimation of the international crude oil price pass-through and testing of the symmetric/asymmetric nature of the retail fuel price adjustments in these economies. Our results show that rigidities in the transmission process exist but the retail fuel speed of upward/downward price adjustment to equilibrium is considered as symmetric in all four economies analyzed. Thus, our findings on the whole do not provide firm evidence to support the “rockets and feathers” hypothesis that crude oil price increases are passed along to the retail customer more fully than the crude oil price decreases.

The relative effects of crude oil price and exchange rate on petroleum product prices: Evidence from a set of Northern Mediterranean countries

This paper provides a set of empirical evidence from five Northern Mediterranean countries that are subject to similar refinery reference prices regarding the relative sensitivity of crude oil prices and exchange rate on (pre-tax) petroleum product prices. The empirical evidence reveals that a one percent increase in exchange rate (depreciation) increases petroleum product prices less than a one percent increase in crude oil prices does in the long run. In the short run, however, a one percent increase in exchange rate increases petroleum product prices more than a one percent increase in crude oil prices does.

Retail and Wholesale Gasoline Price Adjustments in Response to Oil Price Changes

This research examines the long-run relationship between the spot oil price and retail and wholesale gasoline prices. Recent research suggests that the response of the retail gasoline price is faster and the size of the change is larger, in magnitude, following a crude oil price increase compared with periods when the crude oil price is falling; however, some recent papers examining potential asymmetries present mixed results. Our results from a common threshold model estimating the adjustment of gasoline prices and the spot oil price suggest a long-run relationship between retail and wholesale gasoline prices and the crude oil price. Further, results here suggest that both retail and wholesale gasoline prices respond symmetrically to an oil price shock in the long run, indicating little market power by gas stations and wholesalers.

The Impact of Diverting a Fuel Subsidy to the Agricultural Sector on Income Distribution and Poverty

Fuel subsidy is one of the various programs and measures undertaken by the government to alleviate poverty and at the same time to promote growth. As a result of a continuous increase in crude oil price at international levels, the burden of fuel subsidy on the government has become bigger. Thus, the government tries to reduce fuel subsidy gradually. The immediate impact of a reduction in fuel subsidy is an increase in the price of fuel at the retail/eve/. Then, there is a chain effect of an increase in price of fuel to the price of other goods and services. The end result is a decrease in purchasing power of the general consumer. To overcome this problem, the government introduces a direct transfer of payment to poor households, but this compensation is too small to counter the increase in the general price level. At the same time, it is found that this program has a negative impact on macro-economic performance and an increase in poverty, income disparity, and the depth of poverty. As an alternative to the direct cash aid to poor households, the government may transfer fuel subsidy to the agricultural sector. The purpose of this study is to analyze the impact of the diversion of fuel subsidy to the non-food crops in the agricultural sector on income and the poverty in Indonesia. This study employs a Computable General Equilibrium (CGE) model. The Foster-Greer-Thorbecke (FGT} index is used to measure various poverty indicators, such as head count, poverty gap and poverty severity indices. The households are classified into four categories; urban non-poor, urban poor, rural non-poor, and rural poor. Our simulation results show that diverting fuel subsidy by a certain percentage to non-food crops is able to increase households' income, thus reducing poverty.