Rising Oil Prices Research Articles

Asymmetric Pass-through Effects of Oil Price Shocks and Exchange Rates on Inflation in Nigeria: Evidence from a Nonlinear ARDL Model

This paper employs the linear autoregressive distributed lag (ARDL) model, the asymmetric nonlinear ARDL (NARDL) model developed by Shin, et al (2014) to examine the asymmetric effect of oil price and exchange rates pass-through on inflation in Nigeria over a period of 1970 to 2020. The result of the asymmetric test revealed the existence of asymmetries among the variables of the study, suggesting that there is a nonlinear interaction among the variables used in the study. This validates the choice of a non-linear ARDL model for the study. Results of the long-run estimates show that rising (Positive) oil price shocks have a greater impact on inflation than falling (negative) oil price shocks. Furthermore, it is evident from the result that the depreciation of the exchange rate has a much and significant effect on inflation than the appreciation of the exchange rate in Nigeria. However, a rising interest rate increases inflation by 0.84 per cent while a falling interest rate increases inflation by 0.85 per cent. This implies that the effect of negative interest rate on inflation is higher than its positive effect on inflation, though, by a smaller amount of about 0.01 per cent. Again, the short-run dynamic model revealed a high speed of convergence of more than 90% from the short-run disequilibrium. During the study period, the oil price fluctuations showed a significant and incomplete pass-through to both exchange rates and inflation in Nigeria. Moreover, the results suggest that positive oil price changes have a larger impact than the negative ones, that the effect of an oil price shock on inflation and exchange rates is larger in the long-run than in the short-run, and that there is incomplete pass-through effect of oil price on domestic inflation and exchange rates. Based on the findings, the study recommends policies that set oil prices and exchange rates within reasonable limits to check inflation in Nigeria and should diversify its economy as well as withdraw the current subsidy regime completely.

Process of the Study on The Influencing Factors of Airlines Stock Market

The outbreak of COVID-19 in 2020 has brought a huge shock to the world stock markets, especially to the airlines in the service industry. It can be seen that the occurrence of public emergencies is an important factor affecting the airline stock market, which will have a significant negative impact in the short term. In addition to that, due to the international business activities of airlines, exchange rates, and international fuel prices will also have a greater impact on the airline stock. Although airlines can reduce the impact of these factors through active control, the depreciation of domestic currency or the rise of international oil prices will still have a negative impact on the airline stock market in the short term.

Predict Changes in Crude Oil Price and New Energy Automobile Industry Impacted by the Russian-Ukraine War

The Russian-Ukraine War is a hot topic nowadays as it causes a sharp rise in the world crude oil price, due to fears of supply shortages mount, which affects the cost of production for many industries. Meanwhile, the fear of running out of crude oil pushes the world to find new energy as a substitute. The car industry is an outstanding example that is experiencing transit from oil cars to new energy cars. Hence, there exist close relationships between the crude oil price and the new energy car industry. The article will discuss the short-run and long-run impact of the Russian-Ukraine War on crude oil prices and the Chinese new energy car industry using the VAR and ARMA-GARCH model. The models show that the effect of rising crude oil prices on the Chinese new energy automobile industry depends on whether the positive effect of sales growth is greater than the negative effect of the increase in cost in the short run, plus there’s no significant impact for the long term.

Asymetric Pass-through Effects of Oil Price Shocks and Exchange Rates on Inflation in Nigeria: Evidence from a Nonlinear ARDL Model

By utilizing the non-linear ARDL (NARDL) model developed by Shin, et al (2014), we examined the asymmetric effect of oil price and exchange rates pass-through on inflation in Nigeria over a period of 1970 to 2020. Result of asymmetric test revealed the existence of asymmetries among the variables of the study, suggesting that there is a nonlinear interaction among the variables used in the study. This validates the choice of non-linear ARDL model for the study. Result of the long-run estimates show that rising (Positive) oil price shocks have a greater impact on inflation than falling (negative) oil price shock. Furthermore, ot is evident form the result that depreciation of exchange rate has much and significant effect on inflation than the appreciation of exchange rate in Nigeria. However, rising interest rate increases inflation by 0.84 per cent while falling interest rate increases inflation by 0.85 per cent. This implies that the effect of negative interest rate on inflation is higher than its positive effect on inflation, though, by a smaller amount of about 0.01 per cent. Again, the short-run dynamic model revealed a high speed of convergence of more than 90% from the short run disequilibrium. During the study period, the oil price fluctuations showed a significant and incomplete pass-through to both exchange rates and inflation in Nigeria. Based on the findings, the study recommends policies that set oil prices and exchange rate within reasonable limits in order to chack inflation in Nigeria.

Oil price shock and informal workers in dual labor markets

AbstractThis paper examines the impact of a rise in oil prices on the wages of workers in the unorganized sector of a developing economy. The model economy is comprised of two non‐traded transport sectors, formal and informal, along with other sectors. The main results that we obtain are as follows. The informal transport sector contracts when fuel price rises and lowers the real income of the informal workers. The per‐unit return to land rises, and the factor readjustments even raise the output of other sectors in the economy. We also show why inclusion of non‐passenger transport services does not alter the main outcomes of the model.

The role of oil price in determining the relationship between cryptocurrencies and non-fungible assets

ABSTRACT This study aimed to explain the relationship between bitcoin and nonfungible tokens (NFTs) to determine if the NFT is an alternative investment to bitcoin or a complement during oil price uncertainty. The results showed a comovement between NFT and bitcoin prices. However, after excluding the effect of oil prices and using the partial wavelet coherence test, the results changed and the comovements disappeared: bitcoin and NFT became two separate assets that are affected by different variables. Moreover, oil price has more impact on bitcoin than NFT in the medium and long run. However, these results indicate that the change in oil prices, to some extent, is not considered a strong influence on the crypto market. Nevertheless, a significant rise in crude oil prices leads to a significant change in the comovement between crypto assets and they become interrelated.

Cost and Benefit Analysis of Solar Panels at Home

Due to the high utility costs in Cabanatuan City, the solar panel system is rapidly approaching. People in the middle and lower income classes of the country particularly feel the effects of inflation. In order to address the ongoing rise in oil prices and pollution, the government has made the development of renewable energy one of its top priorities. In order to help consumers reduce their utility costs, save money, and produce greener energy, a study on the installation of a solar panel system at home was carried out. The researchers gathered some data from consumers to be utilized as the basis for the contractors' computations, where the adoption of a 3kw on-grid solar panel system was recommended to those respondents with power bills under ₱2,400. The project costs approximately ₱150,000 in total, including installation and permits, and can save approximately ₱2,300 monthly. This investment has a 5.4-year payback period and a total savings of ₱402,000 over a 20-year period. The consumption analysis revealed a sensitive effect on savings and investment payback periods. The study proved that the project's long-term savings can be more than double the initial investment. A SWOT analysis was also performed to highlight the advantages and disadvantages of having an on-grid solar panel, as well as the benefits of clean energy and gas reduction in our environment that future generations could benefit from. The project's cost-benefit is a win-win investment for everyone who wants to save money while also enjoying cleaner air in the long run.

Impact of changes in global crude oil prices on the Indian economy

Oil is a crucial component in nearly every country's economic activities. “As a result, an increase in its price is likely to have a negative impact on the economic expansion of oil-importing nations like India. The purpose of this paper is to investigate how the price of oil affects India's economic growth to see if there is a co-integration relationship between India's economic growth, oil price, capital formation, and inflation. Crude oil always has a lower starting price, but import taxes make it more expensive for the average person. The cost of petroleum or other related items increments as needs be which brings about an expansion in consumption of an everyday person. This paper attempts to explain the significance of reducing crude oil imports to raise a person's standard of living and provides insight into the current state of crude oil imports. In order to avoid a rise in oil prices and its subsequent negative impact on the country's economic growth, the study suggests that the government should refrain from imposing additional taxes.”

Authority-enterprise Equilibrium Based Subsidy Policy for Natural Gas Hydrate Transportation Technology

The continued rise in oil prices and environmental concerns have made natural gas (NG) one of the world’s most important energy sources. As populations and economies grow, the demand for natural gas is increasing due to the expansion of the industrial and commercial sectors, as well as increased household incomes. The potential for significant increases in natural gas supply to meet growing demand makes decisions at all strategic, tactical and operational levels necessary in building new or restructuring existing natural gas transportation systems. In this paper, the multi-objective optimization of natural gas hydrate (NGH) transportation is proposed as a tool for supporting regulatory decisions. Three objective functions are involved in the formulation of the problem: minimization of subsidy costs, maximization of energy utilization, and maximization of profit for each NGH plant. As part of the design parameters for the NGH project, the regulatory agency must consider the entrepreneur’s return on investment and the needs of current and future consumers. In the absence of an optimization tool, this problem may result in unfair gas prices or a lack of investor interest. With a continuous increase in natural gas consumption, the proposed analysis examines growing markets. The mixed subsidy mechanism was applied to a typical example in order to demonstrate the performance of the proposed approach.

An Overview of Nigerian Macroeconomic and Financial Development

The Nigerian economy is one of the biggest in Africa. It has been based mainly on the petroleum industry since the late 1960s. Since 1973, a series of rises in the price of oil has led to a rapid expansion of the transportation, building, manufacturing, and government services industries [1, 2, 3]. Due to the considerable migration of rural residents into the more extensive urban areas, agricultural productivity became so stagnant that cash crops like cotton, peanuts, and palm oil lost their significance as export commodities [4, 5, 9]. After the pandemic-caused recession in 2020, the Nigerian economy improved, but macroeconomic stability declined. The inflation rate in Nigeria is very high, and millions of the Nigerian population lives in poverty due to global commodities shocks, the currency's falling value, trade difficulties, and monetization of the deficit [6, 7, 8, 10]. The rising oil price has had no positive impact on the Nigerian economy since 2021. The country's oil revenue growth is declining due to subsidies on gasoline, and the oil output rate is badly affected [11, 12, 14]. Over 40% of the Nigerian population in 2018 lived in poverty, and over 20% is badly affected and vulnerable. Researchers forecast that over 7.6 million Nigerian are likely to live in poverty between the years 2019 and 2024 because of the rapid population growth in the country [15, 16, 17]. The Nigerian economy is projected to grow by an average of 3.3% in 2022–2024. Still, risk factors like drops in oil production and increased insecurity are significant threats to the country's economic growth [19, 20]. Along with persistent budgetary and debt pressures, high inflation contributes to uncertainty. Furthermore, continued currency shortages and reduced liquidity could impact non-oil sector economic activity and jeopardize macroeconomic stability [21, 22, 13]. Strategic Revenue Growth Initiative (SRGI) Nigeria has made some socioeconomic progress recently. However, the World Bank's 2020 Human Capital Index categorized Nigeria as 150 out of 157 in human capital development [23, 24, 18]. The Nigerian government needs to modify the economy, improve weak institutions and public financial management systems and resolve governance issues to achieve remarkable economic growth. [25, 26]. The constant high levels of inequality in terms of income and opportunities contribute to poverty in the country [27, 28]. Unemployment, social and regional disparities, and political discontent also contribute to a lack of economic growth and poverty. Over 8 million households have been pushed into poverty due to the negative impact of 2020-2022 high inflation [29, 30]

Biomass-sourced polymers for pressure-sensitive adhesive applications

Pressure-sensitive adhesives are self-adhesive chemical products that have gradually supplanted traditional glues in recent years. Most of the commercially available pressure-sensitive adhesives are derived from petrochemical resources. The increasing attention to environmental protection, coupled with the introduction of stringent regulations and rising oil prices, has led to widespread attention being paid to the development of sustainable pressure-sensitive adhesives from biomass sources. This paper summarizes the biomass-sourced pressure-sensitive adhesives and their modification methods that have been reported in recent years as promising alternatives to petrochemical resources.

UAE Sovereign Achievements and Future Aspirations in Vision 2030

Sovereign funds are seen as an economic phenomenon, it was created by the majority of the oil countries, with the aim of save and invest the financial surpluses have been accumulated as a result of rising oil prices, and their utilization in several sectors either within or outside the State. The research aims to identify the sovereign funds in general by clarify the reasons for its establishment, goals, and types. In particular, with a focus on the experience of the UAE by showing the three basic Funds, Investment Corporation of Dubai, Abu Dhabi Investment Authority, and the Maubadala Development Company, and how these funds contributed to achieve economic development and income diversification in UAE.

Automobile Industry in the Long-term Uncertain Market: an Empirical Analysis

The automobile industry has been largely affected since the outbreak of the Russo-Ukrainian War, which is reflected by the crude oil price. In order to see the long-term effect of the oil price fluctuation on the auto industry, this paper analyzes changes in oil price and the rates of return of the automobile industry and new power automobile industry in specific. This research builds a VAR model and an ARMA-GARCH model to analyze the relationship between the stock price of automobile industry and the crude oil price from June 2021 to July 2022. Finally, the paper finds that rising oil prices have a negative net impact on the returns of the entire auto industry, but a positive impact on the returns of the new energy vehicle industry, and changes in oil prices have a positive impact on the volatility of the entire auto industry but no significant impact on the volatility of the new energy vehicle industry.

Catalyst behind Sri Lanka Downfall

Sri Lanka shocked the world with a downfall due to an economic crisis. Among the states that had to mitigate the pandemic, Sri Lanka appears to struggle with the situation and as a result of this event, Sri Lanka is in a position of overdue debt with a total of 51 billion USD worth of debt. The inflation was created by economic shortage activity with imbalanced trade records leads to the overthrown of Sri Lanka’s president and as the result produced a vacuum of power. This paper will use of dependency theory to describe the cause of Sri Lanka’s collapse by examining several factors such as civil war, pandemic, oil price rise, and recent terrorist attack.

Analysing the rising oil price shock driven by Russia-Ukrainian tensions - effect on inflationary pressure in South Africa

Objective – The aim of this paper is to examine the relationship between the CPI, the brent crude oil price, and the PPI for final manufactured goods as well as the Rand/Dollar exchange rate during the past year. The study used South Africa as a proxy for developed countries. The objective is, therefore, to evaluate the effects of the increase in commodity prices on inflation and other macroeconomic variables. Methodology –The study utilised a quantitative methodological approach through the assessment of an econometric model that employed monthly data from January 2017 to May 2022. The paper utilized variables such as CPI, brent crude oil prices, PPI for final manufactured goods as well as the Rand/Dollar exchange rate. Findings – Short- and long-run relationships were established between the variables using the vector error correction model (VECM) and the Johansen co-integration equation methods. The long-run conclusions showed that high brent crude oil prices, high sunflower oil, a depreciating exchange rate and increasingly high PPI levels will lead to an increase in the CPI (Inflation). The results also indicated that oil prices still influence the basic prices of goods and services since all things need to be transported. Novelty – The results of the study showed that a perpetual international and national macro-economic environment is crucial to prevent inflationary pressures and price shocks, while volatile exchange rates unsteady PPI’s and significantly high oil and commodity prices causes cost-push inflation. Policy certainty and political stability is important to keep inflation stable and economic growth positive, which could lead to a more self-sufficient economy which are is reliant on political instability as an obstacle for positive future economic growth. Type of Paper: Empirical JEL Classification: E31, E37, E60, E63 Keywords: Russian-Ukrainian conflict, economic growth, Brent crude oil prices, PPI, CPI, exchange rates, sunflower oil. Reference to this paper should be made as follows: Neethling, J.R; Wyk, A.S.V. (2022). Analysing the rising oil price shock driven by Russia-Ukrainian tensions - effect on inflationary pressure in South Africa, J. Bus. Econ. Review, 7(3), 178–193. https://doi.org/10.35609/jber.2022.7.3(3)

Analyzing the rising oil price shock driven by Russia-Ukrainian tensions - effect on inflationary pressure in South Africa

At the onset of 2022 the Russian Federation occupied Ukraine in a major intensification of the Russo-Ukrainian War that instigated in 2014. The result of the Russians invasion in Ukraine caused a major intensification in the inflationary levels and weakened global economic growth. As a result of the conflict the Brent Crude Oil prices increased from $92.98 per ounce on 24 February to $122.43 per ounce on the 8th of June 2022 which is an increase of 31.67 per cent in less than 4 months. The result of this invasion reformed the macroeconomic environment which fundamentally affected the international commodity markets and consequently leading to insufficient financial linkages between Russia and the rest of the World. The aim of this paper is to examine the relationship between the CPI, the brent crude oil price, the PPI for final manufactured good as well as the Rand/Dollar exchange rate. The study used South Africa as a proxy for developed countries. A quantitative methodology was used through the estimation of an econometric model by utilizing monthly time series data from January 2017 to May 2022. The CPI was chosen as the dependent variable while the independent variables included the PPI, sunflower oil, Rand/Dollar exchange rate and the brent crude oil. Short- and long-run relationships were established between the variables using the vector error correction model (VECM) and the Johansen co-integration equation methods. The long run conclusions showed that high brent crude oil prices, high sunflower oil, a depreciating exchange rate and increasingly high PPI levels will lead to an increase in the CPI (Inflation). In conclusion, the results of the study showed that a perpetual international and national macro-economic environment is crucial to prevent inflationary pressures and price shocks, while volatile exchange rates unsteady PPI's and significantly high oil and commodity prices causes cost-push inflation. Policy certainty and political stability is important to keep inflation stable and economic growth positive, which could lead to a more self-sufficient economy which are not reliant on political instability as an obstacle for positive future economic growth. Keywords: Russian-Ukrainian conflict, economic growth, Brent crude oil prices, PPI, CPI, exchange rates, sunflower oil.

ABOUT ONE ASPECT OF STATE SUPPORT FOR FARMS

Agriculture, despite the relative stabilization of recent years, is still the weakest link in the Georgian economy. This is evidenced by the country's low level of self-sufficiency in many types of agricultural products (for wheat - 22%, for corn – 74%, for vegetables – 61%, for meat - 51%) and its high dependence on imports. In the first 9 months of 2022 alone, the negative balance in foreign trade in agricultural and food products amounted to 385.8 million US dollars, which negatively affects both the macroeconomic state of the economy and the country's exchange rate. Due to the rise in prices for oil products on the world market, Georgia had to pay USD 440 million more in January-September 2022 compared to the corresponding period last year, of which only less than 1/5 was due to economic growth, and the rest “was a merit” of the rise in oil prices. The uncultivated land area remains too large (up to 60%), which, along with other reasons, is due to the rise in the cost of material resources for the production of agricultural products (mineral fertilizers, pesticides, agricultural machinery, fuel). Due to the virtual lack of domestically produced non-ferrous products, the government can only regulate the price of fuel for farmers through the regulation of taxes (excise, VAT). Many countries follow the practice of returning part or all of the cost of fuel to farmers involved in the implementation of government programs or orders. In some countries, the state fully (Sweden) or partially (USA, Germany, etc.) covers the cost of fuel used for agricultural work. In our opinion, it is most acceptable for Georgia to subsidize diesel fuel purchased for agricultural work by manipulating indirect taxes (excise, VAT), for which it is necessary to develop a transparent mechanism for its use. An appropriate law should be adopted by the Parliament of Georgia. Appropriate subsidies should be extended exclusively to farmers involved in the relevant state programs (orders), as well as to the production associations created by them - cooperatives. The excise tax on 1 kg of fuel in Georgia is currently 44 tetri, and on one liter of fuel, respectively, 36.7 tetri. At the same time, if the amount of excise tax per liter of fuel is a constant value, VAT, on the contrary, is a variable value and in each specific case an individual calculation is required. We consider it lawful that the subsidization was at least 1.50 lari per liter of diesel fuel. At prices for October 2022, one liter of diesel fuel costs 4.10 GEL. To cultivate 5 hectares of arable land, a farmer needs approximately 100 liters of fuel, i.e. fuel worth 410 GEL. By subsidizing 1 liter of fuel in the amount of 1.50 GEL, the farmer can save 150 GEL, buying 100 liters of fuel will cost only 260 GEL (= 410-150), i.e. more than 1/3. It seems that in order to reduce the cost of agricultural work, the same work should be carried out in other areas (plowing, milling, sowing ...), which are currently estimated at 1,200 lari per hectare of agricultural land. It seems that in the future the same attitude should be shown in relation not only to fuel, but also to all other types of means of production. For this, the starting point should be the average index of prices for agricultural products for one harvest year, and in this way the average index of price growth for the corresponding means of production is calculated. Both indices should be approved as the basis of price parity between agricultural products and the means for its production (the parity will show how much industrial output or services an agricultural commodity producer can receive per unit of output he produces). Thus, if the increase in prices for agricultural products is 5%, and for inputs for agricultural production - 10%, the difference between them - 5% (= 10% -5%) should be covered by the budget. Price parity should be established for such strategic products as marketable grain, meat, milk, fruits, citrus fruits and some others. Which provide the country's food security and the processing industry with raw materials. The adoption of the law "On the establishment and protection of price parity for goods and services necessary for the reproduction of agricultural products" will contribute to the growth of agricultural products and deepen the production specialization of agriculture, increase the efficiency of the agricultural sector, increase its share in the national economy, motivate life and work in the countryside , reduce the migration of people from rural areas to cities or abroad and, last but not least, reduce the current high dependence on imports in the food supply of the population of Georgia.

How Pakistan Is Coping with the Challenge of High Oil Prices

Global oil prices have shown an almost steady rise since 2003, with the April 2006 price double than that was in January 2004 [Bacon (2005)]. Demand, supply and speculative factors, and their interrelationships all leads to the steady rise in oil prices. In the last couple of years, global demand for oil grew due to economic strengthening in the US, as well as strong economic performance in developing Asia, (especially PR China and India). From 1990 to 2003 world demand for oil grew at the rate of 1.3 percent while for the People Republic of China and India (combined) at 7 percent rate and accounted for almost 40 percent of the demand growth1 [ADB (2005)].

Estimating Total Factor Productivity and Its Components: Evidence from Major Manufacturing Industries of Pakistan

Manufacturing sector of Pakistan accounts for 19.1 percent of GDP and is the second largest sector of the economy. It grew by 8.4 percent during 2007 as against 10 percent last year. In the manufacturing sector, large scale manufacturing (LSM), plays a vital role and accounts for approximately 70 percent of overall manufacturing [Economic Survey of Pakistan (2006-07)]. During 2006-07 relatively slower pace of expansion exhibits signs of moderation on accounts of higher capacity utilisation, difficulties in the textile sector and lower than expected scale of operations of oil refineries. A number of other factors have also contributed to the low pace of expansion in manufacturing including zero percent growth in raw cotton production which is a critical input for the textile industry, vegetable ghee and cooking oil which comprise about 5.5 percent of the LSM sector, showed uninspiring performance due to unparalleled rise in international palm and soybean oil prices. The performance of the automobile sector has been far less impressive this year as compared to previous five years due to a fall in domestic demand for cars on account of increasing auto financing rates. The higher imports of used cars in the beginning of fiscal year 2006-07 also affected the performance of domestic auto mobile sector.

Democratic Institutions and Variability of Economic Growth in Pakistan: Some Evidence from the Time-series Analysis

This paper explores the empirical association between democracy and per capita output growth in Pakistan using data for the period 1947 to 2006. The findings of the paper indicate a weak negative association between democracy and output growth. Consistent with some current empirical literature, democracy is also found to influence output growth indirectly. The empirical results are robust to different democracy variables and output growth equation specifications. The empirical findings also highlight the role of other variables in determining output growth and, except for rising oil prices, show its positive linkage to physical and human capital, government consumption, openness of trade practices and inflation. JEL classification: C22, O43 Keywords: Democracy, Growth, Time-series