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Factors driving oil price —— from the perspective of United States

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  • Su, Chi-Wei
  • Qin, Meng
  • Tao, Ran
  • Moldovan, Nicoleta-Claudia
  • Lobonţ, Oana-Ramona

Abstract

This paper chooses monthly data covering the period from 1990:M1 to 2018:M12 to investigate the contributions of partisan conflicts (PCI), the dollar index (USDX) and U.S. oil production (PRO) on the oil price (OP) by applying the time-varying parameter-stochastic volatility-vector autoregression (TVP-SV-VAR) model. The empirical results are consistent with the general equilibrium model, which states that the PCI has certain influences on the OP. However, the impact of the PCI is less than that of the USDX, and the negative effect of the USDX was strengthened after the global economic crisis. Moreover, the PRO is less important to the oil market than the PCI and USDX. In general, we can conclude that there are important roles that U.S. factors play in the oil market, especially those of partisan conflicts and the dollar value. Understanding the effects of U.S. factors on the oil market can provide revelations for countries, allowing them to formulate energy policies and stabilize the oil market. Additionally, an understanding of these factors can allow investors to adjust their investment decisions and diversify their assets.

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  • Su, Chi-Wei & Qin, Meng & Tao, Ran & Moldovan, Nicoleta-Claudia & Lobonţ, Oana-Ramona, 2020. "Factors driving oil price —— from the perspective of United States," Energy, Elsevier, vol. 197(C).
    • Handle: RePEc:eee:energy:v:197:y:2020:i:c:s0360544220303261
    DOI: 10.1016/j.energy.2020.117219
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    More about this item

    Keywords

    Partisan conflicts; Dollar index; U.S. oil production; Oil price; Time-varying;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • N42 - Economic History - - Government, War, Law, International Relations, and Regulation - - - U.S.; Canada: 1913-
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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