Influence Of Oil Prices Research Articles

Literature Review on the Topic: 'Influence of Oil Price on Alternative Energy Companies Valuation'

Research Purpose: In order to build a financial product on a sound theoretical basis, I analysed the literature available on or related to the topic: “Alternative energy and Oil”. The aim is to verify the hypothesis of correlation between the variations of the price of oil and alternative energy companies‟ stock valuation.Research Design: I searched on internet (Google scholar, SSRN, P&P) for papers related to the topic (selected by number of quotes), and went across a comprehensive analysis of the sub-topics present in the studies. I then looked at the similarities and contradictions in the conclusions and presented the regression methodology.Findings: The available literature on the topic, to this day, seems to agree to a positive and significant Beta on the variation of the price of oil, when looking at the alternative energy companies‟ stock value.Research Limitations: There are only three papers directly related to the specific topic, all the other analysed papers giving more depth to the subject but not answering the original question. Also, the turmoil of the financial market of the past years has provoked perturbations which make predictions less accurate.Research Implications: In the papers analysed, all academics and professionals agree to the fact that alternative energy will develop in the future as a necessity. It is important for an investor to understand the role that this sub-sector will play in the future. Furthermore, the role of the variation of the price of oil on the value of alternative energy companies‟ stock value is important and has to be taken in account when investing in these companies.Originality and Value: Due to the recency of the topic, very little conclusions have been made on the subject. By analysing the most recent and important papers on the broad topic and all the papers on the specific subject, I merged the conclusions of all the authors in this short paper.By reading this literature review, an academic or professional will have a sound understanding of the role and determinants of the alternative energy market.

On the influence of oil prices on economic activity and other macroeconomic and financial variables*

AbstractThe aim of this paper is to investigate the links between oil prices and various macroeconomic and financial variables for a large set of countries, including both oil‐importing and oil‐exporting countries. Both short‐run and long‐run interactions are analysed through the implementation of Granger‐causality tests, evaluation of cross correlations between the cyclical components of the series in order to identify lead/lag relationships and cointegration analysis. Our results highlight the existence of various relationships between oil prices and macroeconomic variables and, especially, an important link between oil and share prices on the short run. Turning to the long run, numerous long‐term relationships are detected, the Granger‐causality generally running from oil prices to the other variables. An important conclusion is relating to the key role played by the oil market on stock markets.

Oil prices, inflation and interest rates in a structural cointegrated VAR model for the G-7 countries

Sharp increases in the price of oil are generally seen as a major contributor to business cycle asymmetries. Moreover, the very recent highs registered in the world oil market are causing concern about possible slowdowns in the economic performance of the most developed countries. In this paper a structural cointegrated VAR model has been considered for the G-7 countries in order to study the direct effects of oil price shocks on output and prices, and the reaction of monetary variables to external shocks. Our results can be summarized as follows: i) a stationary money demand, as suggested by the classic theory of money, can be identified for most countries; ii) according to the estimated coefficients of the structural part of the model, for all countries except Japan and U.K. the null hypothesis of an influence of oil prices on the inflation rate cannot be rejected. Inflation rate shocks are transmitted to the real economy by increasing interest rates; iii) impulse response analysis suggests, for most countries, the existence of an instantaneous, temporary effect of oil price innovations on prices; iv) impulse response functions indicate different monetary policy reactions to inflationary and growth shocks; v) the simulation exercises directed to estimate the total impact of the 1990 oil price shock indicate that for some countries (U.S.) a significant part of the effects of the oil price shock is due to the monetary policy reaction function. For other countries (Canada, France and Italy), however, the total impact is offset, at least in part, by an easing of monetary conditions.

Forecasting Oilfield Economic Performance

This paper presents a general method for forecasting oilfield economic performance that integrates cost data with operational, reservoir, and financial information. Practices are developed for determining economic limits for an oil field and its components. The economic limits of marginal wells and the role of underground competition receive special attention. Also examined is the influence of oil prices on operating costs. Examples illustrate application of these concepts. Categorization of costs for historical tracking and projections is recommended.

The Economics of Old Field Oil Supply

Most additions to proved reserves of crude oil in the United States are associated with reserve revisions and reservoir extensions, which derive exclusively from the continuing development of known oil fields. This paper reviews the major activities pursued by oil field operators that determine the level of production from those fields. Reported reserve additions reflect the consequencies of these activities for the productive capability of old fields and, thus, should be expected to be related to the costs and benefits of investing in such activities. A simple econometric, analysis is presented that demonstrates the influence of oil prices, lifting costs, taxes, and crude oil price controls on reported reserve revisions and extensions for the United States for the period 1970–1986. The strength of the relationship evaluated is particularly striking in light of the year-to-year variability of revisions data noted in other studies. Based on the economic perspective of reserve additions outlined here, U.S. reserves data for 1986 are used to provide a look at the activities that may thus be presumed to have led to the production losses recorded in that watershed year.