Oil prices,nuclear energy consumption,and economic growth: New evidence using a heterogeneous panel analysis

This paper applies panel data analysis to examine the short-run dynamics and long-run equilibrium relationships among nuclear energy consumption, oil prices, oil consumption, and economic growth for developed countries covering the period 1971–2006. The panel cointegration results show that in the long run, oil prices have a positive impact on nuclear energy consumption, suggesting the existence of the substitution relationship between nuclear energy and oil. The long-run elasticity of nuclear energy with respect to real income is approximately 0.89, and real income has a greater impact on nuclear energy than do oil prices in the long run. Furthermore, the panel causality results find evidence of unidirectional causality running from oil prices and economic growth to nuclear energy consumption in the long run, while there is no causality between nuclear energy consumption and economic growth in the short run.     

Energy consumption at the state level: The unit root null hypothesis from Australia

In this paper, our goal is to examine the unit root null hypothesis in energy consumption for Australian states and territory. We consider sectoral energy consumption for Australia and its six states and one territory using time series data for the period 1973–2007. This is the first study that does this. Generally, except for some cases in South Australia, we find strong support that shocks to energy consumption have a temporary effect on energy consumption in Australia.     

What is behind the increase in oil prices? Analyzing oil consumption and supply relationship with oil price

The continuing increases in oil prices have renewed the argument over the real culprits behind these movements. The growth in demand for oil in international markets, especially from the United States and China, is often identified as the main source of consumption pressure on prices, and thus the upward trend in oil prices. This paper uses unit root tests with two endogenous breaks to analyze the characteristics of oil prices, production, and consumption for several countries. By taking into account structural breaks, we find that many countries’ oil consumption and oil prices are stationary, while other countries are not. We also perform causality tests to determine the direction of any possible relationship between oil price and oil consumption and production. Our statistical analysis reveals that production variables cause oil prices, while oil prices tend to cause consumption. As a result, we claim that the blame for the recent fluctuations in oil prices is more appropriately associated with supply factors, not consumption influences.     

OPEC's pricing policy and the international transmission of oil price effects

We endogenize OPEC's pricing policy recognizing that oil price changes affect the real income of oil importers, and that changes in the real income of oil importers affect oil price changes. We determine real income, international trade flows, and prices in a three-region (DCs, OPEC, non-OPEC LDCs) econometric world model. Applying optimal control theory, we derive optimal oil pricing strategies. We find that not allowing for income feedback effects results in an upward bias in the total price elasticity of oil demand and in the optimal oil price path, neither of which is in OPEC's best interests.     

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.     

Revitalising the wind power induced merit order effect to reduce wholesale and retail electricity prices in Australia

This paper investigates the effect of increasing the number of wind turbine generators on wholesale spot prices in the Australian National Electricity Market's (NEM), given the existing transmission grid, from 2014 to 2025. We use a sensitivity analysis to evaluate the effect of five different levels of wind power penetration on prices, ranging from Scenario A, ‘no wind’, to Scenario E that includes existing and planned wind power sufficient to meet Australia's original 2020 41TWh Large-scale Renewable Energy Target (LRET). We find divergence in prices between states and similar prices for nodes within states. This supports the Garnaut Climate Change Review assessment on the prevalence of ‘gold-plating’ the intrastate transmission network and underinvesting in interstate connectivity. We find that increasing wind power penetration decreases wholesale spot prices but that retail prices have increased in deregulated South Australia and Queensland, similarly, in Victoria. We argue that there is a pressing need to split the large generator-retail companies into separate retail and generator companies and to reassess regulatory rules more generally. Interconnector congestion limits the potential for wind power to further reduce wholesale prices across the NEM. So the need for a high capacity transmission backbone in the NEM is becoming clearer and will become pressing when Australia moves beyond its current 2020 LRET.     

Anticipated and unanticipated effects of crude oil prices and gasoline inventory changes on gasoline prices

This paper examines the effect of anticipated and unanticipated changes in oil prices and gasoline inventory on US gasoline prices. We estimate empirical responses to anticipated and unanticipated changes in oil prices and gasoline inventory and show that gasoline price adjustments are faster and stronger for anticipated changes in oil prices and inventory levels than for unanticipated changes. Furthermore, this difference is statistically significant. We use these findings to evaluate the cost of adjustment hypothesis suggested by Borenstein and Shephard (2002). We also find that there is an asymmetry in the effect of gasoline inventory on gasoline and oil prices. This finding complements a well-known result that positive and negative changes in oil prices have asymmetric effect on gasoline prices.     

A panel cointegration analysis of the demand for oil in the Middle East

This article applies recently developed panel unit root and panel cointegration techniques to estimate the long-run income and price elasticities for oil in the Middle East. The results for the panel indicate that demand for oil is highly price inelastic and slightly income elastic in the Middle East. There is considerable variation in the results for the income variable across countries, with the coefficient on the income variable statistically insignificant for several countries. The coefficient on the price variable is statistically significant in all cases with the expected sign and the price elasticity is uniformly low. While the results for the income variable differ across countries, the results for the panel as a whole suggest that the demand for oil in the Middle East is being driven largely by strong economic growth, while consumers are largely insensitive to price changes.     

Carbon dioxide emissions and economic growth: Panel data evidence from developing countries

In this paper we test the Environment Kuznet's Curve (EKC) hypothesis for 43 developing countries. We suggest examining the EKC hypothesis based on the short- and long-run income elasticities; that is, if the long-run income elasticity is smaller than the short-run income elasticity then it is evident that a country has reduced carbon dioxide emissions as its income has increased. Our empirical analysis based on individual countries suggests that Jordan, Iraq, Kuwait, Yemen, Qatar, the UAE, Argentina, Mexico, Venezuela, Algeria, Kenya, Nigeria, Congo, Ghana, and South Africa—approximately 35 per cent of the sample—carbon dioxide emissions have fallen over the long run; that is, as these economies have grown emissions have fallen since the long-run income elasticity is smaller than the short-run elasticity. We also examine the EKC hypothesis for panels of countries constructed on the basis of regional location using the panel cointegration and the panel long-run estimation techniques. We find that only for the Middle Eastern and South Asian panels, the income elasticity in the long run is smaller than the short run, implying that carbon dioxide emission has fallen with a rise in income.     

Electricity consumption,employment and real income in Australia evidence from multivariate Granger causality tests

This paper examines the relationship between electricity consumption, employment and real income in Australia within a cointegration and causality framework. We find that electricity consumption, employment and real income are cointegrated and that in the long-run employment and real income Granger cause electricity consumption, while in the short run there is weak unidirectional Granger causality running from income to electricity consumption and from income to employment.     

Petrol prices and subjective wellbeing

We examine the effect of petrol prices on subjective wellbeing (SWB) using household panel data. To do so, we use 17 waves of the Household, Income and Labour Dynamics in Australia (HILDA) survey. Based on our preferred instrumental variable estimates, we find that a standard deviation increase in petrol prices leads to a decline of 0.0157–0.0245 standard deviations in SWB. The finding that increases in petrol prices significantly lower SWB is robust to alternative measures of wellbeing and alternative ways of addressing endogeneity, as well as employing different sources of fuel price data measured at a range of frequencies. We also examine the channels through which petrol prices influence SWB and find that maintaining social networks is an important way through which petrol prices influence SWB.     

The impact of oil prices on bioenergy,emissions and land use

We evaluate how alternative future oil prices will influence the penetration of biofuels, energy production, greenhouse gas (GHG) emissions, land use and other outcomes. Our analysis employs a global economy wide model and simulates alternative oil prices out to 2050 with and without a price on GHG emissions. In one case considered, based on estimates of available resources, technological progress and energy demand, the reference oil price rises to $124 by 2050. Other cases separately consider constant reference oil prices of $50, $75 and $100, which are targeted by adjusting the quantity of oil resources. In our simulations, higher oil prices lead to more biofuel production, more land being used for bioenergy crops, and fewer GHG emissions. Reducing oil resources to simulate higher oil prices has a strong income effect, so decreased food demand under higher oil prices results in an increase in land allocated to natural forests. We also find that introducing a carbon price reduces the differences in oil use and GHG emissions across oil price cases.     

Modelling the impact of oil prices on Vietnam’s stock prices

The goal of this paper is to model the impact of oil prices on Vietnam’s stock prices. We use daily data for the period 2000–2008 and include the nominal exchange rate as an additional determinant of stock prices. We find that stock prices, oil prices and nominal exchange rates are cointegrated, and oil prices have a positive and statistically significant impact on stock prices. This result is inconsistent with theoretical expectations. The growth of the Vietnamese stock market was accompanied by rising oil prices. However, the boom of the stock market was marked by increasing foreign portfolio investment inflows which are estimated to have doubled from US$0.9 billion in 2005 to US$1.9 billion in 2006. There was also a change in preferences from holding foreign currencies and domestic bank deposits to stocks local market participants, and there was a rise in leveraged investment in stock as well as investments on behalf of relatives living abroad. It seems that the impact of these internal and domestic factors were more dominant than the oil price rise on the Vietnamese stock market.     

Determinants of carbon dioxide emissions: Empirical evidence from 69 countries

This study investigates the determinants of carbon dioxide emissions (CO₂) for a global panel consisting of 69 countries using a dynamic panel data model. To make the panel data analysis more homogenous, we also investigate the determinants of CO₂ emissions for a number of sub-panels. These sub-panels are constructed based on the income level of countries. In this way, we end up with three income panels; namely, high income, middle income, and low income panels. The time component of our dataset is 1985–2005 inclusive. Our main findings are that trade openness, per capita GDP, and energy consumption, proxied by per capita electric power consumption and per capita total primary energy consumption, have positive effects on CO₂ emissions. Urbanisation is found to have a negative impact on CO₂ emissions in high income, middle income, and low income panels. For the global panel, only GDP per capita and per capita total primary energy consumption are found to be statistically significant determinants of CO₂ emission, while urbanisation, trade openness, and per capita electric power consumption have negative effects on the CO₂ emissions.     

Energy consumption and economic growth: The case of oil exporting countries

This paper examines the causal relationship between the per capita energy consumption and the per capita GDP in a panel of 11 selected oil exporting countries by using panel unit-root tests and panel cointegration analysis. The results show a unidirectional strong causality from economic growth to energy consumption for the oil exporting countries. The findings have practical policy implications for decision makers in the area of macroeconomic planning. In most major oil exporting countries, government policies keep domestic prices bellow free market level, resulting in high levels of domestic energy consumption. The results imply that the energy conservation through reforming energy price policies has no damaging repercussions on economic growth for this group of countries.     

The impact of ICT investment and energy price on industrial electricity demand: Dynamic growth model approach

The authors investigate the effects of information and communications technology (ICT) investment, electricity price, and oil price on the consumption of electricity in South Korea's industries using a logistic growth model. The concept electricity intensity is used to explain electricity consumption patterns. An empirical analysis implies that ICT investment in manufacturing industries that normally consume relatively large amounts of electricity promotes input factor substitution away from the labor intensive to the electricity intensive. Moreover, results also suggest that ICT investment in some specific manufacturing sectors is conducive to the reduction of electricity consumption, whereas ICT investment in the service sector and most manufacturing sectors increases electricity consumption. It is concluded that electricity prices critically affect electricity consumption in half of South Korea's industrial sectors, but not in the other half, a finding that differs somewhat from previous research results. Reasons are suggested to explain why the South Korean case is so different. Policymakers may find this study useful, as it answers the question of whether ICT investment can ultimately reduce energy consumption and may aid in planning the capacity of South Korea's national electric power.     

Nuclear energy consumption, oil prices, and economic growth: Evidence from highly industrialized countries

This study utilizes the Johansen cointegration technique, the Granger non-causality test of Toda and Yamamoto (1995), the generalized impulse response function, and the generalized forecast error variance decomposition to examine the dynamic interrelationship among nuclear energy consumption, real oil price, oil consumption, and real income in six highly industrialized countries for the period 1965-2008. Our empirical results indicate that the relationships between nuclear energy consumption and oil are as substitutes in the U.S. and Canada, while they are complementary in France, Japan, and the U.K. Second, the long-run income elasticity of nuclear energy is larger than one, indicating that nuclear energy is a luxury good. Third, the results of the Granger causality test find evidence of unidirectional causality running from real income to nuclear energy consumption in Japan. A bidirectional relationship appears in Canada, Germany and the U.K., while no causality exists in France and the U.S. We also find evidence of causality running from real oil price to nuclear energy consumption, except for the U.S., and causality running from oil consumption to nuclear energy consumption in Canada, Japan, and the U.K., suggesting that changes in price and consumption of oil influence nuclear energy consumption. Finally, the results observe transitory initial impacts of innovations in real income and oil consumption on nuclear energy consumption. In the long run the impact of real oil price is relatively larger compared with that of real income on nuclear energy consumption in Canada, Germany, Japan, and the U.S.     

The value of solar: Prices and output from distributed photovoltaic generation in South Australia

The Australian government's Solar Cities Program sees great value in so-called “cost-reflective pricing”, code for valuing solar at pool prices. We test that proposition in South Australia where pool prices and insolation are often high and we show that there were few days in 2004 when the pool price gives better outcomes than if the solar is valued at the regulated and fixed, so-called standing contract price. We also find that the illustrative day used in the Solar Cities Program literature to promote the notion of cost-reflective pricing is highly atypical. Finally, we consider ways in which the incentive to install distributed photovoltaic generation might be improved.     

Oil prices and economic policy uncertainty: Evidence from a nonparametric panel data model

We examine the relationship between oil prices and economic policy uncertainty in G7 countries. To do so, we employ a nonparametric panel data technique that allows the trend and coefficient functions to evolve as unknown time-varying functional forms. We also estimate country-specific and common trend functions allowing them to evolve over time. Using monthly data from G7 countries over the period 1997:01–2018:06, we find that the effect of oil prices on economic policy uncertainty is time-varying. Our results show that the estimated time-varying coefficient function of the oil price was negative in years in which increases in oil prices were driven by a surge in global aggregate demand. Further, our nonparametric local linear estimates show that the country-specific and common trend functions are increasing over time. Our findings are robust to endogeneity and alternative specifications.     

When environmental and redistribution concerns collide: The case of electricity pricing

Countries worldwide face major income inequality and environmental challenges. However, recent social upheavals reveal the conflict of interests induced by policies designed to address these concerns. One example relates to residential electricity, where volumetric grid charges and taxes may impede the affordability of electricity. We develop and calibrate a model that captures the social planner's trade-off between inequality aversion and environmental concerns. We employ panel data on 105,000 households in the Swiss Canton of Bern from 2008 to 2013, including electricity consumption, household income and tax payment characteristics. The results show that with inequity aversion and no negative environmental externalities electricity consumption should be subsidised by income tax revenue. With negative environmental externalities, or asymmetric information between the government and the utility, end-user electricity prices are shifted upwards. For high degrees of inequality aversion, the optimal electricity end-user price is below the marginal cost, even in the presence of negative environmental externalities.