Increase In Oil Prices Research Articles

Asymmetric and nonlinear oil price pass-through to economic growth in Croatia: Do oil-related policy shocks matter?

Recent turbulent developments in the world oil market have increased the volatility of oil prices and rekindled interest in studying their impact on macroeconomic activity. Using the vector autoregression framework, this paper investigates the impact of oil price shocks, expressed in linear, asymmetric and nonlinear form, on real gross domestic product (GDP) growth in an oil-importing small open economy, i.e., Croatia, for the period 1995:Q1-2019:Q4. The results corroborate the presence of the asymmetric, nonlinear and direct short-run effect of oil price shocks on real GDP growth. A decrease in oil prices leads to a statistically significant increase in real GDP and its more volatile behavior, while an increase in oil prices causes a considerable drop in economic activity only in the fourth quarter. The oil-related policy shock variables, fuel market liberalization and fuel taxation, turned out to be insignificant predictors of GDP growth in an asymmetric and nonlinear model specification.

The asymmetric effects of international oil prices, oil price uncertainty and income on urban residents’ consumption in China

This study employs the nonlinear autoregressive distributed lag (NARDL) model to investigate the asymmetric effects of international oil prices (oil price uncertainty) and urban residents’ income on consumption in China. The empirical results show that the asymmetric effects of oil prices (oil price uncertainty) and urban residents’ income on consumption are significant in the both the short- and long-term. Specifically, increasing urban residents’ consumption significantly respond to a decline in oil prices while there is no obvious decreased consumption response to a rise in oil prices due to the wealth transfer effect. We also observe that the stimulating effect of falling oil price uncertainty on urban residents’ consumption is noticeably stronger than the adverse effect of increasing oil price uncertainty on consumption because of the expectation effect. Finally, we find that the asymmetric effect of income changes on consumption is significant due to the ratchet effect, whereby an income increase has a stronger stimulus effect than the reducing effect of income decline on consumption.

Bank Financial Stability and International Oil Prices: Evidence from Listed Russian Public Banks

ABSTRACT Using data on 17 listed public banks from Russia over the period 2008 to 2016, we analyze whether international oil prices affect the bank stability in an oil-dependent country. We resort to a Pool Mean Group (PMG) estimator, and we show that an increase in oil prices has a long-run positive effect on Russian public banks stability. While positive oil-price shocks contribute to bank stability in the long run, an opposite effect is recorded for negative shocks. However, no significant impact is documented in the short run. Our findings are robust to different bank stability specifications and different samples.

Determination of Public Purchasing Power and Brand Image of Cooking Oil Scarcity and Price Increases of Essential Commodities

Cooking oil is one of the primary needs of the Indonesian people. The habits of the Indonesian people cannot be separated from the use of cooking oil in processing various types of dishes. This makes cooking oil a crucial role. As the largest Crude Palm Oil (CPO) producing country globally, it should not be a problem for Indonesia to meet its domestic cooking oil needs. In addition to meeting the needs of households and small industries, significant industries also require cooking oil as a component of producing one of the products. For this reason, it is necessary to have a strict policy taken by the government so that the scarcity of cooking oil and the increase in the price of essential commodities can be resolved quickly. This study aims to determine people's purchasing power, brand image, scarcity of cooking oil, and price increases of essential commodities.

Quantifying nonlinear effects of BRIC and G4 liquidity on oil prices

Research on oil prices has concentrated on demand and supply factors and has largely underestimated the importance of the financialization of commodities. To assess the impact of financial factors on oil prices, this article investigates the liquidity of Brazil, Russia, India, and China (BRIC) and that of a group of four developed economies (G4) consisting of the Eurozone, Japan, the United Kingdom, and the United States. An application of the single-state vector autoregressive (VAR) model to monthly data from the 1999–2020 sample period reveals that a positive shock to the liquidity of the BRIC countries leads to significant increases in real oil prices. These novel findings stem from a consideration of Markov-switching vector autoregressive (MSVAR) models, which shows that an unanticipated increase in the G4 liquidity is positively linked with real oil prices. The main findings are as follows. (1) We identify three regimes that are associated with the volatility of real oil prices and the liquidity measure, including a crisis regime that characterizes the subprime crisis and the COVID-19 pandemic. (2) Impulse response function analyses show that the impact of G4 liquidity under the crisis regime is almost twice as large as that during normal periods, while the impact of BRIC liquidity during such a crisis period is almost three times larger. (3) A shock to BRIC liquidity has a greater impact on real oil prices than a shock to the liquidity of the G4 economies. This analysis helps in assessing the importance of BRIC and G4 liquidity in relation to upsurges in the real oil prices.

Crude oil price changes and exchange rate: Case of oil exporting countries in CEMAC

Purpose: Policy makers, academics and journalists have frequently discussed the link between oil prices and exchange rate in recent years. After the 2014 World’s biggest oil price drop that plunge CEMAC oil exporting countries into an external liquidity strain, due to the pressure raised on Euro to which CFA franc is pegged, this paper revisits the dependence between crude oil price changes and exchange rate.
 Methodology: Crude oil price is the main independent variable, though other independent variables have been considered. The change in crude oil price is captured through differentiation of average yearly crude oil prices. The real effective exchange rate (RER) is the dependent variable, captured with the consumer’s price index (CPI), which describes the strength of a currency relative to a basket of other currencies. The data used in this study were extracted from Word Bank Development Indicators (WBDI, 2020) and World Bank Commodity Price Data. The study covers the period 1990-2018. The main channels of transmission used in this paper are the terms of trade channel, the wealth or portfolio channel and the anticipation or expectation channel. A panel autoregressive distributive lag (ARDL) model was used.
 Findings: The result shows that there is a short run positive and insignificant effect of oil price changes on exchange rate of CEMAC oil producing countries. In the long-run, there is rather a negative and significant impact of oil price changes on exchange rate. More concretely, a unit increase in oil prices depreciates exchange rate of these countries by 0.4340 units and this is significant at 1%. The short run Cross-country analysis shows that the effect is negatively significant for Cameroon and Chad; positive and significant for Democratic Republic of Congo and Equatorial Guinea; but positive and not significant for Gabon. These results are likely linked to structural differences between countries as the dependence on oil revenue and the security situation are concerned.
 Recommendations: Given this negative long run damage of oil prices on exchange rate of CEMAC oil producing countries, it is highly advisable these countries increase direct investments in key economic non-oil sectors in order to reduce dependence. On the other hand, considering the unidirectional causality from exchange rate to oil prices, a policy of exchange rate anchor by BEAC is suitable in order to absorb the shock of oil price changes on exchange rate and eventually inflation in the these economies.

The dynamic moderating function of the exchange rate market on the oil-stock nexus

Oil price movements have an important impact on the stock market, and this impact could be dynamically moderated by the exchange rate, which could not be effectively depicted by VAR or GARCH methods widely used in previous studies. This paper adopts a more flexible nonlinear model to investigates this dynamic moderating effect of the exchange rate market on the oil-stock nexus for 45 major countries from November 30, 2005 to November 22, 2019. We also compare the differences in this moderating effect between oil-importing and oil-exporting countries and confirm the presence of a wealth transfer effect. Specifically, the empirical results show that (1) In the stage where domestic currency depreciation or appreciation degree is not serious (the growth rate is less than 0.1), an increase in crude oil prices has a positive impact on stock market returns, and this positive impact is weakened when the growth rate of the exchange rate return approaches zero. (2) As the local currency continues to appreciate (the growth rate is greater than about 0.22), the increase in crude oil prices may negatively influence stock market returns to an increasingly greater extent among crude oil importers. (3) The increase in crude oil prices may have a short-term positive impact on stock market returns in oil-exporting countries due to the wealth transfer effect when the domestic currency appreciates at a faster rate. Finally, we discuss the policy implications of our findings to help investors avoid risks due to fluctuations in international oil prices.

How Does International Crude Price Affect China’s Carbon Emission?

Abstract This study extends the standard STIRPAT model by introducing an energy price factor and uses the extended STIRPAT model to examine the effect of international crude oil prices on China’s carbon emission, This paper applies Ridge regression to conduct empirical analysis. The study finds that changes in international crude prices have a significantly positive impact on China’s carbon emission. A 1 percent increase in international crude oil price leads to a 0.12 percent increase in China’s carbon emission This finding remains unchanged even after a set of control variables are included in the analysis and survives all the rigidity tests. Keywords: Crude price, China, Carbon emission.

Russian-Ukraine 2022 War: A Review of the Economic Impact of Russian-Ukraine Crisis on the USA, UK, Canada, and Europe

The popular belief worldwide is that the global financial sanctions unleashed on Russia, the seizure of assets and properties of the oligarch friends to President Putin for Russia’s current attack on Ukraine will cripple the Russian economy and hinder any further attack on Ukraine. This is logical reasoning, however, the impact of this crisis extends to the global economy. Thus, the purpose of this study is to review the economic impact of the 2022 Russia-Ukraine war on key global economic actors, specifically, countries that have unleashed financial sanctions on Russia as punishment like the USA, Canada, UK, and EU. This study uses the Social Contract and the Interest Group Theories to explain the rationale behind this crisis from its origin. Evidence from reviewed literature shows that although the consequences of this crisis have had a fatal impact on Russia’s economy, the world economy has begun to feel the impact of this crisis. Inflation which is already ravaging most global economies is steadily rising due to the sharp increase in oil, natural gas, and food prices just a few days into this crisis. Experts expect a negative impact on household consumption, increase uncertainty, unpredictable stock swings, supply chain disruptions, bulging utility bills, decreased investment due to political risks, and economic growth impediments. It is therefore vital for policymakers worldwide to seek alternative means of survival if Russia decides to react by restricting its export of vital global commodities of which it is a significant export leader like oil, natural gas, wheat, neon, titanium, palladium, and ammonium nitrate.

Oil Price Change and Economic Growth: Evidence from Net Sub-Saharan Africa Oil Exporting Countries

This paper aimed at examining the long run relationship between the oil price change and economic growth for Sub-Saharan Africa (SSA) net oil exporters (Angola, Cameroon, Congo (Democratic Republic), Congo (The Republic), Equatorial Guinea, Gabon and Nigeria) with the sole purpose of pinpointing the threshold level where an increase beyond that is no longer or even contributing negatively to the economic growth of these countries. Based on the dynamic heterogenous panel PMG estimation, the empirical results show that a threshold level exists between oil price increase and economic growth for these countries, where an increase in oil price (op2) depicts a negative sign which is non-linear and at the same time signifying an inverted u shape relationship with the real GDP (rgdpc) as an indicator of economic growth. As the finding suggested, the rising oil price above certain threshold triggers fall in real GDP. However, the economies of these countries depend largely on oil revenue, therefore, economic diversification, saving and investing the excess of crude oil revenue at the time of higher oil prices became necessary to them in order to prevent their economies against the vagaries of volatility and uncertainty of the oil price.

Structure of GDP growth rates in Russia up to 2024

By the fall of 2021, the Russian economy had practically overcome the crisis caused by coronavirus pandemic and sharp drop in oil prices in the first half of 2020, having returned in terms of GDP, industrial production and investment in fixed assets to pre-crisis levels. At the same time, the prospects for further growth of the Russian economy remain uncertain, since both in the short and long term, the balance of factors affecting the growth rate of Russia’s GDP is shifted to a negative area. These external factors include the growing risks of a new financial and/or economic crisis in the world’s leading economies (including China), imposing large-scale sanctions against Russia in connection with a special operation in Ukraine, the instability of world commodity markets, as well as the processes of decarbonization and restructuring of the world economy. Internal factors of growth comprise increased investment activity of private and state-owned companies (and in the field of national projects), expansion of non-resource non-energy exports, while internal growth constraints comprise possible decline in the working-age population in Russia and slow growth of the real personal income. According to the official forecast by the RF Ministry of Economic Development, after the recovery acceleration of the economy by 4.2% in 2021 (the first estimate by Rosstat — 4.7%), GDP growth will stabilize at about 3% per year in subsequent years. However, it is lower than expected growth rates of the world economy, but it is significantly higher than the average growth rates of the Russian economy over the past decade (about 0.7% per year).To reveal the growth rates structure, which corresponds to anticipated economic dynamics in Russia, we have used an approach based on identifying three components of GDP growth rates — structural, foreign trade, and business cycle ones. In this article a new decomposition method was applied, which assumes the neutrality of the foreign trade component if the oil price is at the average long-term values.In case of achievement of the RF Ministry of Economic Development forecast, actual and structural unemployment indicators convergence may lead to a shortage of labor in certain sectors of the Russian economy in 2022—2023. The solution to this problem lies in the sphere of external and internal migration policy intensification and measures for promoting inter-sectoral labor mobility. Estimates of the output gap show that it is advisable to pursue a stimulating fiscal policy in 2022 with a transition to neutrality in 2023—2024. Supporting the global spread of vaccines against coronavirus infection and the recovery of the global economy will contribute to an increase in oil prices and in the foreign trade component of economic growth in Russia.

On the Dynamic Connectedness of the Stock, Oil, Clean Energy, and Technology Markets

Using monthly data from September 2004 to February 2020, this paper investigates the connectedness of the renewable energy, common stock, oil, and technology markets. The time-domain Diebold and Yilmaz spillover index approach is used to analyze the volatility spillover between these four markets. The study’s findings reveal that the oil and clean energy markets have bidirectional volatility spillover. The oil market has been found to be a net receiver of volatility. Furthermore, the study shows that volatility spillover is stronger in extreme positive and negative shock periods than in medium shock periods. Our findings show that, during crisis periods, the volatility spillover index rises, while the total connection reached its lowest point in 2015. Our findings suggest that policymakers should be informed that, as long as oil prices remain low, alternative energy-producing industries will not require specific policies to mitigate their vulnerability to crude oil price shocks. However, large spillover in the tails—particularly in the right tail—indicates vulnerability to extreme events, such as the negative effect of oil price increases.

Petroleum Engineering Continues To Drop, But There Is Talk of Better Times Ahead

For the seventh year in a row, the number of undergraduates in petroleum engineering (PE) programs is down, but that could be changing. Over the next year, Lloyd Heinze, a PE professor at Texas Tech University who has long done the survey discussed here, sees this downward trend slowing and then stabilizing in the next couple of years. There is no sure way to predict which majors undergraduates will pick, but there are some long-standing patterns to consider. Based on past long slumps for US programs, the decline line is nearing a point where it stabilizes at a low level for years, and when the industry lives off the surge in PE graduates that occurred during the previous boom years. But there is another trend that could change things. There has always been a strong relationship between class sizes and the preceding increases in oil price. The recent surge in oil prices to more than $90/bbl could signal a rebound, as it did early this century when it helped end the slump that dated back to the 1980s. If those two trends apply, it could mean “there will be fewer bachelor’s degrees awarded this year, and after that we will be back to growing ever so slightly. And then 2 years from now we will be overwhelmed,” by new students, Heinze said. So far, the survey is not offering evidence of a change from the down trend. The best indicator of the size of future graduation classes is the level of undergraduate enrollment. During the slide down, the number of seniors has been far greater than the number of freshmen. This year’s class shows that gap has narrowed. To stabilize it, the number of freshmen will need to far exceed the size of the senior class because another pattern is at work. Heinze said the number of freshmen and sophomores who say they will major in petroleum engineering drops by 30% per class year as these students realize what is required, which includes proficiency in calculus. Hiring Drives Enrollment While it is hard to deny the power of higher oil prices to increase oil industry activity, Heinze and others in academia contacted for this story point out that the ultimate driver is the industry’s appetite for new engineers. Students and their parents are looking for signs that the hard and costly job of getting a PE degree is rewarded with a job and a salary that justifies the effort. So far, those in PE programs are seeing an improved job market with demand for the graduates they are supplying. When Texas A&M announced a spring job fair, there was a strong response from potential employers, said Tom Blasingame, a professor of petroleum engineering at Texas A&M and 2021 SPE president. He said the market is much improved for students seeking jobs, but it is not like the boom days when multiple offers were common. “I do not believe that oil prices are going to help us significantly in increasing the enrollment,” said Mohan Kelkar, chairman of the McDougall School of Petroleum Engineering at the University of Tulsa, who sees oil companies sticking to conservative spending programs.

History Matching of Petroleum Engineering Graduation Rates

An email discussion among the four members focused on one of several charts created by Tom Blasingame, 2021 SPE president. A summary of their insights follows. Tom Blasingame explained the chart, which led to further discussion. The “reference” trend shown (red) occurs over the period from 1970 to 2000, which peaked at 1,587 BS graduates around 1984. It is a Gaussian probability distribution fitted to the data provided by Lloyd Heinze, professor at Texas Tech University’s Bob L. Herd Department of Petroleum (solid black line), and data extracted from a 1991 paper by John C. Calhoun, who was then at Texas A&M University and previously served as the 1964 SPE president. The reference trend is then shifted in time to the period from 2003 to 2033 (green). The mean and standard deviation of the statistical trends are the same; only the midpoint in time and peak in BS graduates are adjusted for each period. We note an excellent match of the data in the period from 2003 to 2033. Taking the reference trend back in time to the period from 1940 to 1970 (purple trend), we do not get a reasonable match of the data, with the exception of a slump from about 1951 to 1956. It is difficult to explain this feature, other than to note that in this timeframe the US began to import significant quantities of oil. Regardless, we note the statistical trend does capture the beginning and end of this distribution, and we recognize that there is no single peak in the data trend from 1940 to 1970. If we follow the historical trends and the current increase in oil prices and consider the need for oil and gas in the foreseeable future, we predict that the downward trend may stabilize as it did before and level out at the range of 250 graduates a year, while the demand for graduates is much higher. In this scenario, I consider the following positives and negatives. - Negative publicity around fossil fuels and social/political pressure to shut down the oil industry will continue, pulling the graduates’ figures down. - Current energy shortages and price spikes will remind the public that the end of oil and gas is not near, which will start to improve the image of petroleum engineering. - Deepening global economic crises and rising inflation will reduce people’s buying power and move them from highly idealistic to mostly pragmatic decisions. That, combined with the unmatched salary prospect of petroleum engineers with only a 4-year undergraduate degree, will increase the interest in the PE degree. - Considering that oil and gas will remain to be slightly over 50% of the energy mix, and that the energy demand will increase by 47% by 2050, we will need to produce roughly 45% more oil and gas than today. Even with the increased efficiency … we will need more petroleum engineers.

Increases in oil price or oil exports: Which one is more positive on trade balance for African OPEC Member Countries?

AbstractThis study examines whether an increase in oil prices or oil exports will improve the trade balance in African OPEC Member Countries. The annual panel data of four African OPEC Member Countries, namely Algeria, Angola, Libya and Nigeria were used in the study. The aim of the study is to determine whether African OPEC Member Countries will benefit more from an increase in oil prices or an increase in oil exports coupled with a depreciation in the exchange rate. Two panel estimators were used, namely a fully modified OLS and a dynamic OLS. The results indicate that both an increase in oil prices and in oil exports will improve the trade balance of African OPEC Member Countries; but the greater benefit will be from an increase in crude oil exports. Furthermore, depreciation in the exchange rate will discourage imports, while it will be insignificant in encouraging exports. Policymakers should know that it will be more beneficial to increase oil exports rather than oil prices in order to improve the trade balance of their country. The oil producing countries are supplying the crude oil based on the equilibrium in the world market demand increase in economic activities is favourable to trade balance. In addition, the central bank has to realise that devaluing the exchange rate is not an effective way to improve exports since it will not lower the price of domestic crude oil.

Thermal/Cooling Energy on Local Energy Communities: A Critical Review

One of the most crucial factors for energy transition and the incorporation of renewable energy sources into the existing energy map is citizen engagement. Local energy communities (LECs), which are cooperative-based coalitions aimed at reducing the carbon footprint of the residential building sector, have received increasing attention in the past decade. This is because residential buildings account for almost half of the total energy consumed worldwide. A resounding 75% of it is used for thermal energy consumption, heating and cooling, cooking and bathing. However, the main focus of the literature worldwide is explicitly on electrical LECs, despite the fact that the significant increase in natural gas and oil prices, creates instability in the heating and cooling prices. The scope of this study is to provide an overview of the research field regarding Thermal LECs, using both a thorough literature review as well as bibliometric analysis (VOSviewer software), in order to validate the findings of the review. The results indicate a collective scarcity of literature in the field of thermal/cooling energy communities, despite their proven value to the energy transition. A significant lack of directives, research background and state initiatives in the context of LECs incorporating thermal/cooling energy production, storage and distribution systems, was also observed. Case studies and the applications of such systems are scarce in the available literature, while published studies need further feasibility assessments.

Asymmetric oil price shocks and the economies of selected oil-exporting African countries: a global VAR approach

The study investigated the effect of oil price shocks on the economies of four selected oil-exporting African countries from the period of the first quarter of 1980 to the fourth quarter of 2018 using a global vector autoregression. After carrying out all the preliminary tests such as the unit root, cointegration, weak exogeneity, persistence profile and the stability test, we found asymmetric effects of oil price shocks on output to be significant in Algeria and Egypt while symmetric effects are found in Gabon and Nigeria. The study discovered that oil price shocks are higher and persist in Algeria and Egypt while the effects of the shocks are lower in Gabon and Nigeria. Thus, this study concluded that effects of positive oil price matter for Algeria and Egypt while effects of both positive and negative oil price do not matter in Gabon and Nigeria’s economies. This study recommends that Algeria and Egypt should always maximize oil revenue during the period of oil price increase to offset economic severity during the period of oil price decrease.

Influence of Oil Factor on Economic Growth in Oil-exporting Countries

Traditional types of energy resources, among which oil is primary, have a huge influence on economic development in various manifestations. In our research, we discuss dependence of economic growth in oil-exporting countries on first-order factors, such as oil prices, oil production, and structural shift in a share of oil exports. To review 2005-2019, we chose leading oil-exporting nations, including the OPEC members (Iraq, Iran, Libya, Saudi Arabia, and Nigeria), as well as countries outside this group (Russia, Kazakhstan, Azerbaijan, and Norway). Having used statistical and regression techniques, we confirm that the correlation between oil price fluctuations and economic growth raises with the scale effect. Larger economies (by absolute GDP in oil-exporting nations and hydrocarbon production) might generate more intensive economic growth from positive changes in oil prices than small economies. Also, the OPEC members show the strongest structural shifts in the change of the share of oil exports than the other countries. Resulting regression dependences led us to the conclusion that in oil-exporting countries, economic growth largely depends on an increase in oil prices and changes in oil production rates. But contrary to the expectations saying that in time of downturns, as far as global oil prices fall, nations will reduce oil exports, we observe the reverse picture – changed role of the price factor. We explain this with the keeping income-balance strategy, where the oil price parameter is a tool to choose ideal production. Our findings show that with the 1%-increase in oil production, the countries under considerations (the OPEC members) might reach GDP from 0.0367% (Iraq) to 0.437% (Libya). For countries outside OPEC, such a GDP growth might be more intensive. For instance, in Russia, it might be up to 1.559%. This also points out that the joint coordinating policy in oil production affects the economic growth potential.

The Effect of Crude Oil Prices and Internet on Economic Growth in Timor Leste

Continuous economic growth improves the welfare and the living standards of the people. However, for a country to experience economic growth, several factors come into play, including resource endowment, economic policies, political stability, and more. This research aimed to examine the effect of crude oil prices and internet on economic growth in Timor Leste. An autoregressive distributed lag model was used to analyze the time series data from 2005-2020. The cointegration test results showed that crude oil prices, internet, and economic growth are cointegrated. Based on the model coefficients, the estimation results revealed crude oil prices and internet have a significant effect on the country's long-term and short-term economic growth. The long-term effect of crude oil prices on economic growth is negative. In every 1% increase of crude oil prices, there is a 10.3% decrease in economic growth. A 1% reduction in crude oil prices leads to a 10.3% economic growth. Furthermore, the long-term effect of the internet has a long-term positive effect on economic growth. Every 1% internet increase, there is a corresponding 27.65% increase in economic growth.

Oil shocks and the U.S. economy in a data-rich model

Are all oil price shocks the same? We investigate the effects of three types of global crude oil price shocks using a factor augmented VAR framework and 185 monthly macroeconomic indicators from 1978 to 2017. Our results indicate that while both demand and supply driven oil price shocks lead to a significant increase in the global crude oil price and high degree of pass-through to US consumer and producer prices, oil specific precautionary demand shocks are the main drivers of fluctuations in the price of crude oil and the US price level, followed by global economic activity oil demand shocks. Further, while increases in the price of oil triggered by oil supply shocks lower US economic activity, those triggered by global economic activity oil demand shocks are associated with increased US economic activity. Our results suggest the need for monetary policy to stabilize the pass-through from global crude oil prices to domestic inflation.