Asian Bulletin of Energy Economics and Technology

The Impact of Oil Price Shocks on Macroeconomic Activity: Searching Evidence from Oil Exporting and Importing Countries using Unstructured Vector Autoregressive (VAR) Model

Sixtus Cyprian Onyekwere, Joseph Dike, Barbara Aya Eshun — Fri, 12 Feb 2021 00:00:00 +0000

In the new global economy, oil price shocks have become a central issue for many economists. Very sharp oil price increases cause a slowdown in economic growth. However, it can be argued that, various countries tend to respond to oil price shock differently, especially on whether they are importers or exporters of oil. In this study, an unstructured VAR model is considered to examine the effects of positive oil price shocks on five macroeconomic variables on two oil-importing and two oil-exporting countries. Denmark and Norway are used to represent oil-exporting countries, while Japan and Belgium stand for oil importing countries. The general result found is that oil-exporting countries tend to benefit from positive oil price shocks, with stock market and GDP consistently rising with every shock. However, it was further found that the rise tends to be accompanied by mild inflation and increasing interest rate for the concerned countries. On the other hand, it was found that oil-importing countries are either not affected by oil price shocks or lose out, as GDP and stock market show negative responses to oil price shock for the concerned countries. These Results from the VAR estimate were statistically significant.

Optimizing Crude Oil Sales from Strategic Petroleum Reserves in Asia

Jennifer Irene Considine, Philipp Galkin, Abdullah Aldayel — Wed, 14 Apr 2021 00:00:00 +0000

A joint oil stockpiling facility no more than 3 days sailing from its key markets would be ideally positioned as a Strategic Petroleum Reserve for net importing nations during times of crisis and tight markets. At other times, the facility would have additional value in its capacity to provide an excellent central location for the sale of spot crude for a crude oil marketing company or major producing company. At the same time, the sale of crude oil options to Asian markets can provide a secure and reliable source of supply during times of volatility and enhance a major producing company’s market share in the region. Spot crude oil and product sales from a joint oil stockpiling facility would be able reach tight markets in a few days, and in fact would be available for pick-up in variable quantities that are appropriate for specific market disruptions. As a result, the sale of spot crude oil spread options would have the potential to address sporadic and unanticipated increases in demand without adding undue downward pressure to regional oil prices. The case study develops a model to price the sale of crude oil spread options to China from a hypothetical joint oil stockpiling facility in Northeast Asia over a 15-year period from 2016 to 2030.

Renewable Energy Consumption, Environmental Sustainability, and Economic Growth in Developing Countries

Tonuchi, E. Joseph, Ariolu, C. Charles — Wed, 09 Jun 2021 00:00:00 +0000

This study investigated the nexus between renewable energy consumption and economic growth in developing countries and the role of environmental sustainability in the nexus between renewable energy consumption and economic growth. To achieve the objective, the researcher employed General Method of Moment (GMM) to solve for the possible problem of endogeneity common in previous studies using data sourced from World Bank. It was discovered that renewable energy consumption has positive but weak impact on economic growth in developing countries but when environmental sustainability is accounted, the impact of renewable energy consumption improves. Similarly, interacting CO2 with renewable energy changes the sign of CO2 from positive to negative. The implication of this study is that renewable energy consumption impacts on the economy might be weak but is justified giving its environmental sustainability potential.