This paper employs time varying coefficient approach to assess sensitivity of crude oil price change to a number of factors among which change in OPEC crude production and change in US oil production. Our finding indicate crude oil price is inelastic to OPEC production change, with elasticity varying between 0.09 and 0.13, but elastic to US oil production change with elasticity between 0.99 and 1.05. This imply on average crude oil price is about 8 times more responsive to US supply expansion than to OPEC supply decisions. As a result, OPEC producers have a limited impact on oil price reversal but the withdrawal of the US high cost shale technology producers from crude oil production at low price levels can be more effective driver of oil price rises in the future. Such low level sensitivity of oil price to change in OPEC supply imply, other things remain unchanged, for oil price to rise from the current $45 per barrel to $70 per barrel, OPEC cartel needs to cut its current daily production of 27 million barrels by 8 percent.
Oil & Gas Intelligence Report: A Discussion of Price Forecasting MethodolgiesDuff & Phelps
Throughout this report, Duff & Phelps will analyse the nature of crude oil prices, their historical evolution and the factors that condition their changes in order to evaluate certain tools for their prediction.
As observed during the last decades, oil prices, mainly because of the influence of exogenous factors, have shown significant oscillations that have created a frame of uncertainty that may not be easy to manage.
Despite credit market turbulence and slowing activity in many major advanced economies, oil prices have been reaching record highs in recent months. Besides oil-specific factors, such as geopolitical risks and speculations, the current price boom is driven by demand and supply forces that reinforce each other amid supportive financial conditions. This paper aims to a link macroeconomic variables together with oil prices in order to provide complement decision tools used by commercial and investment banks when optimizing their investment portfolios. For that reason, we apply financial programming model with incorporated oil price variable. We show that oil prices affect private consumption, gross domestic product, inflation, and imports. On the other hand, we also investigate effects of macroeconomic variables on oil market equilibrium. A decrease in oil supply as well as depreciation of the US$ lead to higher oil prices, which in turn decrease private consumption and output, but as well stimulate inflationary pressures. Empirical test is performed on the basis of quarterly US data from 2001 to 2007. Although financial programming models are subject to limitations and empirical implications are difficult to apply, some general relations between selected macroeconomic variables and oil price can be determined.
An Investigation of Crude Oil and its Implication for Financial Markets Priesnell Warren ✔
This research paper seeks to unearth the possible repercussions of fluctuations in Crude Oil markets and how they will affect global trade and financial markets. Crude oil or Black Gold is one of the world’s most precious commodities as its change in price affects the entire economy.
Oil & Gas Intelligence Report: A Discussion of Price Forecasting MethodolgiesDuff & Phelps
Throughout this report, Duff & Phelps will analyse the nature of crude oil prices, their historical evolution and the factors that condition their changes in order to evaluate certain tools for their prediction.
As observed during the last decades, oil prices, mainly because of the influence of exogenous factors, have shown significant oscillations that have created a frame of uncertainty that may not be easy to manage.
Despite credit market turbulence and slowing activity in many major advanced economies, oil prices have been reaching record highs in recent months. Besides oil-specific factors, such as geopolitical risks and speculations, the current price boom is driven by demand and supply forces that reinforce each other amid supportive financial conditions. This paper aims to a link macroeconomic variables together with oil prices in order to provide complement decision tools used by commercial and investment banks when optimizing their investment portfolios. For that reason, we apply financial programming model with incorporated oil price variable. We show that oil prices affect private consumption, gross domestic product, inflation, and imports. On the other hand, we also investigate effects of macroeconomic variables on oil market equilibrium. A decrease in oil supply as well as depreciation of the US$ lead to higher oil prices, which in turn decrease private consumption and output, but as well stimulate inflationary pressures. Empirical test is performed on the basis of quarterly US data from 2001 to 2007. Although financial programming models are subject to limitations and empirical implications are difficult to apply, some general relations between selected macroeconomic variables and oil price can be determined.
An Investigation of Crude Oil and its Implication for Financial Markets Priesnell Warren ✔
This research paper seeks to unearth the possible repercussions of fluctuations in Crude Oil markets and how they will affect global trade and financial markets. Crude oil or Black Gold is one of the world’s most precious commodities as its change in price affects the entire economy.
The Impact of Oil Price on Economic Development of Kurdistan Region of Iraq f...IJAEMSJORNAL
Kurdistan region of Iraq signifies a great case study to investigate the impact of oil price, for the reason that most of its producing reliance on exporting crude oil KRG is one of the main oil exporting regions. Usually, the national revenue relies on crude oil revenue in KRG comprises a great percentage of Kurdistan region of Iraqi government’s budget and also KRG’s economy can be impact by would economic during economic difficulties. Consequently, growing oil crude oil price can influence on economic development in Kurdistan region of Iraq. Therefore, it is important to utilize other resource instead of oil income as a different approach to increase region’s income. The key objective of this article is to investigate the impacts of oil price and oil production value on economic development. Annual growth rate, compound growth rate and correlation coefficient can be utilized to estimate of the data. The findings revealed that an economic development is one of the most significant sources of economic transformation since it reproduces the society's capability to rise productive volume and ideal investment and likewise sustainability obligation comprises an expanded economy on the face of shocks, dynamically implements technology and head accumulation human money, competitively can increase comparative advantages compared to the other. Consequently, it operates within steady, balanced economic strategies and economic growth and there was positively statistically significance between oil price and GDP, oil production value and GDP.
This is the SPRE presentation from four experts on their 2017 oil price outlooks at the October 2016 full-house Society of Petroleum Resources Economists' meeting in Houston. They included Carl Larry (Frost & Sullivan), Raoul LeBlanc (IHS), Afo Ogunnaike (Wood Mackenzie) and Tony Starkey (S&P Global, Platts). The meeting was opened by JC Rovillain (Enhanced Value Recovery) and the panel discussion was moderated by Javan Meinwald (Marketing Upstream). Check out the YouTube video for the compete presentations and the panel discussion. https://www.youtube.com/channel/UC1sXSv6-jXlbBCQwtcB3kUA
This paper examines the relationship between Saudi oil revenues and the Kingdom’s economic growth over the past 47 years. In analyzing the data that are needed for this analysis, problems were encountered with the basic real GDP and government oil revenue data that are typically used. The most widely-used measure of non-oil private sector activity that is available, the Non-Oil Private Institutional Sector GDP, does not include the Gross Value Added of all of the private activities, omitting over SAR 80 billion of real activity (in 2010 prices). A new series was constructed, consisting of all of the non-oil private activities, including the recently corporatized/privatized companies. In addition, the oil revenue data prior to 1987 were found to be unsatisfactory for use as published, due to their being based on the 354-355 day Hijra calendar. A new conversion methodology, based on a recently published paper by Qualls et al. (2017), was applied, and the pre-1987 data were converted to a consistent Gregorian basis with good results. The two series were determined to have a unit root of order one, with a highly significant long-run relationship. An error-correction model was then estimated, and highly significant short- and long-run relationships were found. A Ganger Causality test was performed, with the results confirming the ECM’s results, with real government oil revenue growth “Granger-causing” real private-sector GDP growth. Finally, the new non-oil activity GDP measure produced better results than did the traditionally-used Non-Oil Private Sector GDP.
Impact Analysis of Petroluem Product Price Changes on Households’ Welfare in ...inventionjournals
This paper examines the impact of petroleum products price changes on household welfare in Zaria metropolis of Kaduna state. Respondents communities were stratified selected base on their geographical locations. Descriptive statistics and inferential statistics tools were employed and use for data analysis. Descriptive statistics was used to analyze socio economic characteristics of household head and to determine the price changes of petroleum products on households. while inferential statistical tools was employed to specifically show how price changes of petroleum products affect the household through increase in prices of petroleum products which causes decrease in demand for the products, and also have multiplier effect on goods and services. On the other hand, decrease in prices of petroleum products also increase the demand for the products in Zaria metropolis. To achieved this objective, non parametric chi-square test was employed. The results shows that, the three petroleum products that is, petrol (PMS), gas (LPG) and kerosene (DPK) of the study have an impact on household welfare. This indicated that increase in the petroleum products price changes causes decrease in demand of the products, while on the other hand the decrease of the petroleum products prices causes increase in demand for the products which was in conformity with the demand theory that was adopted in this study. The study also recommends, government should deregulate the downstream petroleum sector to allow for increase participation and competition which will alternatively result in reducing prices of petroleum products Moreover, emphasis on alternative sources of energy such as gas, solar, wind and hydraulic sources should put into consideration. Government should expanded consumption capacity effect which will translate to increased demand for varied consumer good and hence increased sales and profitability of a number of Nigerians
Oil Prices have been extremely volatile during the last decade due to extensive speculative pressures on the commodity. in this episode of Energy Risk Management Series we show one of the methods of countering the same.
Crude oil price in 2011
When analyzing the prospects of crude oil price in 2011, there are several aspects worth considering. The expected increase in world demand for Oil in 2011 - IEA (International Energy Agency) expects petroleum demand worldwide in 2011 to be 88.8 million barrels per day, which is roughly a 1.6% increase in demand for oil in 2011 compares to 2010; in 2010 the daily consumption was estimated at 87.4 MB/d. OPEC, which is responsible for about 40 percent of the world crude oil supply, announced, in a recent OPEC meeting, it will sustain its current quota of 24.845 million which was set back in 2008.
Forecasting the Causal Relationship between Oil Prices and Exchange Rate in N...iosrjce
This study empirically forecasted the causal relationship between oil prices and exchange rate in
Nigeria using data for 45 years (1970 - 2014). The data which is purely secondary data was sourced through
the Central Bank of Nigeria Statistical Bulletin for various years. The study modified the Sibanda and Mlambo
(2014)’s model to estimate the relationship and long-run effect of oil prices and exchange rates in Nigeria. With
the Durbin-Watson statistic value that there is no autocorrelation in the model, t-test statistic was used to test
the hypothesis that “there is no significant relationship between oil prices and exchange rate in Nigeria”, using
the e-view statistical software. The empirical findings indicate that a unit increase in oil price will lead to
44.91% increases in exchange rate in Nigeria. This implies that oil prices significantly influence exchange rate
in Nigeria, with the t-statistic P-value (0.0000) and table value (1.671) at 5% level of significance. The study
then recommended that exchange rate management policy makers should ensure that the oil price changes are
included in exchange rate management in Nigeria
Kamiar Mohaddes - University of Cambridge
Hashem Pesaran - USC Dornsife INET & Trinity College, Cambridge
ERF Conference on “Arab Oil Exporters: Coping with a New Global Oil Order”
Kuwait, November 26-27, 2017
www.erf.org.eg
The Impact of Oil Price on Economic Development of Kurdistan Region of Iraq f...IJAEMSJORNAL
Kurdistan region of Iraq signifies a great case study to investigate the impact of oil price, for the reason that most of its producing reliance on exporting crude oil KRG is one of the main oil exporting regions. Usually, the national revenue relies on crude oil revenue in KRG comprises a great percentage of Kurdistan region of Iraqi government’s budget and also KRG’s economy can be impact by would economic during economic difficulties. Consequently, growing oil crude oil price can influence on economic development in Kurdistan region of Iraq. Therefore, it is important to utilize other resource instead of oil income as a different approach to increase region’s income. The key objective of this article is to investigate the impacts of oil price and oil production value on economic development. Annual growth rate, compound growth rate and correlation coefficient can be utilized to estimate of the data. The findings revealed that an economic development is one of the most significant sources of economic transformation since it reproduces the society's capability to rise productive volume and ideal investment and likewise sustainability obligation comprises an expanded economy on the face of shocks, dynamically implements technology and head accumulation human money, competitively can increase comparative advantages compared to the other. Consequently, it operates within steady, balanced economic strategies and economic growth and there was positively statistically significance between oil price and GDP, oil production value and GDP.
This is the SPRE presentation from four experts on their 2017 oil price outlooks at the October 2016 full-house Society of Petroleum Resources Economists' meeting in Houston. They included Carl Larry (Frost & Sullivan), Raoul LeBlanc (IHS), Afo Ogunnaike (Wood Mackenzie) and Tony Starkey (S&P Global, Platts). The meeting was opened by JC Rovillain (Enhanced Value Recovery) and the panel discussion was moderated by Javan Meinwald (Marketing Upstream). Check out the YouTube video for the compete presentations and the panel discussion. https://www.youtube.com/channel/UC1sXSv6-jXlbBCQwtcB3kUA
This paper examines the relationship between Saudi oil revenues and the Kingdom’s economic growth over the past 47 years. In analyzing the data that are needed for this analysis, problems were encountered with the basic real GDP and government oil revenue data that are typically used. The most widely-used measure of non-oil private sector activity that is available, the Non-Oil Private Institutional Sector GDP, does not include the Gross Value Added of all of the private activities, omitting over SAR 80 billion of real activity (in 2010 prices). A new series was constructed, consisting of all of the non-oil private activities, including the recently corporatized/privatized companies. In addition, the oil revenue data prior to 1987 were found to be unsatisfactory for use as published, due to their being based on the 354-355 day Hijra calendar. A new conversion methodology, based on a recently published paper by Qualls et al. (2017), was applied, and the pre-1987 data were converted to a consistent Gregorian basis with good results. The two series were determined to have a unit root of order one, with a highly significant long-run relationship. An error-correction model was then estimated, and highly significant short- and long-run relationships were found. A Ganger Causality test was performed, with the results confirming the ECM’s results, with real government oil revenue growth “Granger-causing” real private-sector GDP growth. Finally, the new non-oil activity GDP measure produced better results than did the traditionally-used Non-Oil Private Sector GDP.
Impact Analysis of Petroluem Product Price Changes on Households’ Welfare in ...inventionjournals
This paper examines the impact of petroleum products price changes on household welfare in Zaria metropolis of Kaduna state. Respondents communities were stratified selected base on their geographical locations. Descriptive statistics and inferential statistics tools were employed and use for data analysis. Descriptive statistics was used to analyze socio economic characteristics of household head and to determine the price changes of petroleum products on households. while inferential statistical tools was employed to specifically show how price changes of petroleum products affect the household through increase in prices of petroleum products which causes decrease in demand for the products, and also have multiplier effect on goods and services. On the other hand, decrease in prices of petroleum products also increase the demand for the products in Zaria metropolis. To achieved this objective, non parametric chi-square test was employed. The results shows that, the three petroleum products that is, petrol (PMS), gas (LPG) and kerosene (DPK) of the study have an impact on household welfare. This indicated that increase in the petroleum products price changes causes decrease in demand of the products, while on the other hand the decrease of the petroleum products prices causes increase in demand for the products which was in conformity with the demand theory that was adopted in this study. The study also recommends, government should deregulate the downstream petroleum sector to allow for increase participation and competition which will alternatively result in reducing prices of petroleum products Moreover, emphasis on alternative sources of energy such as gas, solar, wind and hydraulic sources should put into consideration. Government should expanded consumption capacity effect which will translate to increased demand for varied consumer good and hence increased sales and profitability of a number of Nigerians
Oil Prices have been extremely volatile during the last decade due to extensive speculative pressures on the commodity. in this episode of Energy Risk Management Series we show one of the methods of countering the same.
Crude oil price in 2011
When analyzing the prospects of crude oil price in 2011, there are several aspects worth considering. The expected increase in world demand for Oil in 2011 - IEA (International Energy Agency) expects petroleum demand worldwide in 2011 to be 88.8 million barrels per day, which is roughly a 1.6% increase in demand for oil in 2011 compares to 2010; in 2010 the daily consumption was estimated at 87.4 MB/d. OPEC, which is responsible for about 40 percent of the world crude oil supply, announced, in a recent OPEC meeting, it will sustain its current quota of 24.845 million which was set back in 2008.
Forecasting the Causal Relationship between Oil Prices and Exchange Rate in N...iosrjce
This study empirically forecasted the causal relationship between oil prices and exchange rate in
Nigeria using data for 45 years (1970 - 2014). The data which is purely secondary data was sourced through
the Central Bank of Nigeria Statistical Bulletin for various years. The study modified the Sibanda and Mlambo
(2014)’s model to estimate the relationship and long-run effect of oil prices and exchange rates in Nigeria. With
the Durbin-Watson statistic value that there is no autocorrelation in the model, t-test statistic was used to test
the hypothesis that “there is no significant relationship between oil prices and exchange rate in Nigeria”, using
the e-view statistical software. The empirical findings indicate that a unit increase in oil price will lead to
44.91% increases in exchange rate in Nigeria. This implies that oil prices significantly influence exchange rate
in Nigeria, with the t-statistic P-value (0.0000) and table value (1.671) at 5% level of significance. The study
then recommended that exchange rate management policy makers should ensure that the oil price changes are
included in exchange rate management in Nigeria
Kamiar Mohaddes - University of Cambridge
Hashem Pesaran - USC Dornsife INET & Trinity College, Cambridge
ERF Conference on “Arab Oil Exporters: Coping with a New Global Oil Order”
Kuwait, November 26-27, 2017
www.erf.org.eg
Oil has for decades been perceived as a necessary and highly addictive energy commodity, fueling the world economy. It is a crucial input good for most of the net-oil consumer countries, and it is an important source of revenue for the net-oil supplier countries. This means that any changes in the oil price will affect the entire world economy. Chloé Le Coq and Zorica Trkulja from Stockholm Institute of Transition Economics have written a policy brief that explains to what extent the oil-price fluctuations matter for the economy.
Read more: https://www.hhs.se/site
A report conducted by ICF International and released by the American Petroleum Institute. Titled "U.S. Oil Impacts: The Impacts of Horizontal Multi-stage Hydraulic Fracturing Technologies on Historical Oil Production, International Oil Costs, and Consumer Petroleum Product Costs," the new report shows that horizontal drilling and hydraulic fracturing, which are now responsible for 48% of all U.S. oil production, shaved up to $0.94 per gallon from fuel prices in 2013.
This study investigated the relationship between premium exchange rate and output growth in
African oil producing countries between 1995 to 2018 using panel Vector Error Correction as estimation
technique Data for the study were sourced from World Bank Development indicator data base, IMF online data
base and Central Banks of the selected countries
Globalization and liberalization puts the emphasis on exports as a technique in which developing countries like the Kingdom of Eswatini should adopt to expand their markets beyond their domestic market. For the developing countries to be international competitive in the global markets they need to minimize their production cost particularly on the products that are being exported. The production of most of the exported commodities needs lot energy from oil; hence there has been tremendous increase of oil and its by-product worldwide. The current oil demand for most countries in the world is not met because of insufficient reserves for crude oil in most countries. The Kingdom of Eswatini does not have an oil reserves or oil-refining facilities hence they depends on imports from the neighbouring states in order to meet the consumption requirement. The oil price shocks in the global market normally have adversely effects on various macroeconomic variables such as exchange rate since the oil is traded in US dollars. Oil and exchange rate are considered to be essential factors for domestic economies for developing countries like the Kingdom of Eswatini. The purpose of the study is to investigate the causal relationship between Lilangeni-dollar exchange rate and crude oil price by using the Toda-Yamamota approach. The study used daily time series from January 01st, 2005 to April 30th, 2018 of nominal exchange rate of Lilangeni (Eswatini currency [SZL]) vis-à-vis United States dollar (USD) data as well as the global price of Brent crude oil data that was used as a proxy for the Global crude oil price. The results from the Toda-Yamamoto Granger causality test revealed that there is a unidirectional causality from the global oil price to the Eswatini’s nominal exchange rate (SZL/USD). Hence the study concluded that the global crude oil price influence the Eswatini’s nominal exchange rate. Therefore the study recommends that in the formulating of Eswatini’s exchange rate policy emphases should be on the global oil prices in order not to misalign the Eswatini’s currency.
GROWTH FACTORS AND CHALLENGES FOR OIL MARKET; Demographic Factors; Oil Demand; Motorization in Asian Countries; Upstream Costs Increase; US Shale Oil Production; Deepwater Production; Iraqi production growth prospects; GTL – challenge for the oil market after 2020
Understanding the decline of global oil exportsASPO.be
In this study, we use indicators such as the exports-to-production ratio, and the difference between the growth rate of oil exports and the growth rate of oil production, to characterize the dynamics that lead to a decline of oil exports. Many countries have passed their peak of oil exports, and the world as well, in 2005. The indicators presented here show that the deterioration of the fundamentals is a long term dynamics, thus meaning that global oil export will likely continue declining, though temporary rebounds can occur. These evolutions are then related to recent events such as the Arab Spring, the rise of oil prices on international markets, and the current economic crises. The peaking of world oil exports is a recent and significant turning point, though still largely ignored, but its implications for both oil-importing and oil-exporting countries are vast.
Financial Algorithms presents the energy trading scenario for the year 2016. In this presentation, after examining various fundamental factors in energy sector, FA forecasts the crude oil price, gasoline & natural gas price levels for the year 2016; in case of mean volatility levels and high volatility levels, both. FA also focuses on how to model price levels and volatility surfaces in low volatility and high volatility scenarios under forward & forward-forward models using various energy contracts and spreads i.e. crack spread. Various greek sensitivities including second order & third order greeks, which can be helpful in projecting the price & volatility levels, are also described. At the end, correlation factors, fundamental & technical both, are discussed. These correlation factors are exogenous in price forecasting, and new emerging trends which can affect the energy trading in a long run also been discussed.
The study of spatial socio-economic development constitutes a significant field of analysis of innovation creation and diffusion. Understanding the spatial evolution of the different socio-economic systems in the age of globalization requires a synthesizing and integrated theoretical approach to how innovation is generated and replicated. This article aims to study three significant spatial socio-economic development theories –the growth poles, the clusters, and the business ecosystems. A literature review reveals that (a) the concept of growth poles concerns mostly the analysis of spatial polarization between specific territories and regions, (b) the clusters concept addresses the issue of developed inter-industrial competition and co-operation from a meso-level perspective, and (c) the analytical field of business ecosystems provides an evolutionary approach that can be valorized for all co-evolving spatial socio-economic organizations. In this context, an eclectically interventional mechanism to strengthen innovation is suggested. The Institutes of Local Development and Innovation (ILDI) policy is proposed for all firms and business ecosystems, of every size, level of spatial development, prior knowledge, specialization, and competitive ability. The ILDI is presented as an intermediate organization capable of diagnosing and enhancing the firm’s physiology in structural Stra.Tech.Man terms (strategy-technology-management synthesis).
The formulation and implementation of development plans serve as the benchmark for evaluating economic progress in different sectors of an economy. Since independence, successive administrations in Nigeria have paraded different economic development plans. At the continental level also, several development programmes have been articulated for driving development in the countries of Africa. Many times, supposed laudable economic programmes have failed to identify with the interest of citizens, largely due to poor communication of such programmes. This study investigated citizens’ participation in the implementation of Nigeria’s Vision 20:2020. Among others, the study asked the following questions: to what extent are Nigerian citizens aware goals of Vision 20:2020 economic blueprint? What were the media used in popularising Nigeria’s Vision 20:2020 economic blueprint? The study was anchored on the Participatory Development theory. The survey research design was used to study a population of 84, 004, 084 from which a sample size of 384 respondents was drawn. The sample was based on Keyton’s sampling system. Findings of the study showed that many citizens of Nigeria do not understand the goals of Vision 20:2020. It was also found out that many citizens of Nigeria cannot identify development projects executed in line with the goals of Vision 20:2020. Based on these findings, the study recommended, among other things, that the Nigerian government should partner with civil society organisations to popularise the goals of Vision 20:2020. It was also recommended that citizens of Nigeria should be encouraged to participate in the formulation and implementation of development programmes.
The central purpose of the study is to evaluate the programs, project planning and management in Ethiopian Red Cross society and its comparison with procedures of project planning and management system. The study found that Ethiopian Red Cross society has been working on a lot of community development projects in Ethiopia for several decades. Most projects were principally emphasized on disaster and risk reduction. Different organizations use diverse project procedures to achieve the anticipated objectives. This also true for the Ethiopian Red Cross society projects. The Ethiopian Red Cross society had integrated some unique style of project planning and management system in its project. Thus, there was no total departure in the whole system of project development phases. Every cycle of the project life spans are used beginning from the point of concept initiation to final implementation and closure phases.
Although Africa’s contribution to the world’s greenhouse gas emission is the smallest compared to other continents, yet they tend to be affected most by the variability in Climate. Malawi is not an exception to this climate change, as they are not just faced with rising temperatures and variable rainfall patterns, but with reoccurring droughts and severe flooding. Agriculture has been noted to contribute significantly to not only climate change but also has significant impacts on global warming through its greenhouse gas emissions. Nevertheless, not all farming systems impact negatively on climate change. Conservation Agriculture is a farming system that encourages no or minimum soil disturbance, maintenance of a permanent soil cover, and diversification of crop species. These three interlinked principles combined with good agricultural practices promote biodiversity and normal biotic processes, both on and under the ground surface, thereby increasing the productivity and nutrient use efficiency of water, into a more resilient farming system which will help sustain and improve agricultural production. This review looks at Conservation Agriculture practices in the Machinga Agricultural Development Division of Malawi and its role in climate change mitigation and adaptation. This paper shows that Conservation Agriculture has played an active role in the adaptation and mitigation of climate change effect by reducing atmospheric greenhouse gas emissions but suggested there is a need for the government to formulate a CA framework that is founded on the three interlinked principles and not just based on soil and water conservation principles which are currently being advocated and practised.
The study was conducted on issues affecting the academic achievement of female students in selected primary schools of Jimma Arjo woreda while its objective was to investigate the major factors that affect the academic achievements of female students in primary schools of four sampled primary schools/Arjo primary school, Andinnet, Arbi-gebeya and Wayu Warke primary schools. Female students academic achievements show an upgrading from time to time, but still the rise is delicate when contrast to males. The finding identified the five broad categories, Family related, school related, socio-economic related, cultural related were the major factors that affect the academic achievements of females’ education. The common issues household responsibilities, low awareness of parents towards females education, parents financial problems, parents education level, lack of school facilities, school distance, the nature of teacher student relationship, the study behavior female students implement, teaching method teachers use, early marriage, less avails of role models are the main reasons for squat academic achievements of female students on education. To alleviate these upward parents awareness to wards the benefit of educating females, motivating female students, providing financial supports for the poor female students, improving school facilities and protecting female from abduction and early marriage/from any harmful traditions were recommended.
The economic loss of timber caused by over stumps and defects is an essential issue in forest science but study regarding this is very limited in Nepal. Thus, this research was objectively conducted to assess the volume of timber loss and associated monetary loss caused by over stumps and defects in logs and reason behind this. Three community forests namely Deurali, Jay Durga and Raniphanta community forests were selected for this research. Total enumeration was done so 375 stumps and 224 defected logs were measured from15 March to 15 April, 2019. The height and diameter at the butt end were measured using simple tape and D-tape respectively. Additionally, the length and diameter of defects in log was recorded. Total thirty key informant interviews and three focus group discussions were organized to assess the major causes of over stumps and defects. The timber volume loss caused by over stumps was calculated using cylindrical volume formula and volume loss caused by defect was calculated using formula, i.e. gross volume - net volume. The price of wood was collected from community forest to calculate the monetary value of timber loss. The principal component analysis was applied to assess the major causes of over stumps and defect in log. The highest total volume loss was recorded around 15.217 m3 (28.49%) caused by over stumps and out of this, it was 53.41 m3 timber loss in Deurali community forest. The loss due to defects in tree was ranged from 128.57 to 284.21 m3 in the community forests. The monetary value of loss caused by over stump was US$ 6971.14 of Shorea robusta in Deurali community forest and it was US$ 8100.52 because of defect. The principal component analysis showed that use of saw and axe for felling the trees in the community forests was considered as highest factor of over stump and diseases and over mature trees were key factors of wood defect. The research will be useful for policy makers and scientific community to monitor the timber loss.
Background: The role of the pharmaceutical industry in a country such as Nigeria in the provision of safe, high quality and efficacious pharmaceutical products to meet the healthcare need of the populace, cannot be over-emphasized. This study was undertaken to critically look at the issues affecting Medicines’ Security in Nigeria. Methods: A self-completion questionnaire was used for data collection. The questionnaire was administered to participants of an Industry event in September 2017. Data collected were analyzed using Statistical Package for Social Science. Results: A total number of 800 questionnaires were administered to the participants and 529 of the questionnaires were included for analysis. Male participants (58.6%) were more than female participants, all age groups were well represented and more than a third of the respondents had first degree as their minimum qualification. Majority of the respondents (91.3%) indicated that Ministry of Health and its agencies were key to protecting the pharmaceutical sector, while slightly less of that proportion (79.1%) indicated that they patronized Nigeria pharmaceutical products. Almost all the participants (91.7%) supported the need for the local pharmaceutical industry to have access to sustainable funding and other incentives. A similar proportion (89.6%) of the respondents indicated that the local pharmaceutical industry should be prioritized in policy making and implementation. A significant proportion of the study participants (82.3%) indicated that access to medicines in Nigeria is a security issue. Conclusion: To ensure Medicines’ Security and attain medicines self-sufficiency in Nigeria, radical policies must therefore be put in place, together with enabling good business and industrial environment by the government in order to protect, promote and grow the local pharmaceutical industry in Nigeria.
Agricultural Informatics is a valuable domain in the field of interdisciplinary sciences. This is responsible for the applications of Information Technology, Computing and similar technologies into the agricultural activities. This is the combination of Agricultural Science and Information Sciences. The field due to technological nature is much closed with the Agricultural Engineering or Agricultural Technology. There are many allied and similar nomenclature of the fields but all of these are primarily responsible for the same purpose. The field is rapidly increasing in recent past and most practiced in the developed nation. However, in developing countries as well Agricultural Informatics becomes an emerging field of practice and growing rapidly. Agricultural Informatics is growing both in pre and post agricultural activity. This branch is considered as branch of Information Sciences & Technology due to its technological applications in the field of agriculture and allied areas. Information Sciences are the broadest field within the allied branches and growing rapidly. Agricultural Informatics educational programs have started in recent past in different level and stream of education viz. science and technology. However within the broad periphery of Information Sciences it could be offered in other streams and under the wide variety of Information Sciences. This paper is broad and interdisciplinary in nature and deals with the aspects of the Information Sciences and Technology including features, nature, scope and also the potentialities in respect of Agricultural Informatics.
Agriculture has been the major source of livelihood in Nigeria, primarily because the environment is favorable for Agricultural practice. On the basis of climate, topography and vegetation the country is divided into five agricultural zones, namely Dry sub humid, Sub-humid, very humid and swamp/flood. Subsistence agriculture formed the major system of farming in the olden days which provide food crops for human consumption, while surplus are transported to the local markets for sale. Subsistence agriculture also forms the basis upon which all other system of farming are built. Hence, this paper examines the problems and prospects of subsistence agriculture in Ibarapa East local Government Area of Oyo State. Ten farming centres were used as samples in the area. Questionnaires were used to collect relevant data. Percentage and T-test distribution techniques were used to analyze the data. The findings show that there is low agricultural production in the study area as a result of problems such as shortage of fund, land tenure system, inadequate transportation system among others.
One of the most burning issues that have dominated the public sphere in Nigeria and other oil exporting countries is the covid-19 pandemic and its attendant challenges. This pandemic is a shock on real economic fundamentals and frictionless of the market. It introduces a barrier between the market forces with strong complementary feedbacks in the real economy. The absence of precise vaccine or medication for the virus has necessitated the adoption of several precautionary measures with the aim of containing its wide spread. Critical among which are the travel restrictions, lockdown measures as well as social and physical distancing. These measures have detrimental effect on the demand and price of oil in the international market. In view of that, this study evaluates the social and economic impact of covid-19 in Nigeria taking into cognisance the effect on certain critical macroeconomic indicators. The study adopted an analytical approach to supplement the much ongoing documentations on the subject matter. Result shows that virtually all essential macroeconomic indicators are grossly affected with tax, remittances and employment exhibiting severe consequences. Also, uncertainty, panics and lockdown measures are key to motivating higher decrease in world demand. The supply disruptions and huge death toll generates a heightened uncertainty and panic for household and business. This uncertainty and panic leads to drop in consumption and investment thereby causing a decrease in corporate cash flows and triggered firm’s bankruptcy. Also, lay-off and exiting firms produce higher unemployment while labour income decreased significantly. Since it entails a large amount of government expenditure especially in the health sector which is required to contain the spread of the virus, there is needs for government to diversify its revenue sources and thus drop over dependency on the oil remittance. Furthermore, there is a need to support the financial system to avoid the health crisis becoming a financial crisis in the long-run.
The outbreak and subsequent spread of COVID-19 to the West African sub-region have brought significant changes to the different aspects of our lives and grounded educational and socio-political and economic activities of ECOWAS member states. The pandemic has exposed the poor state of the health systems and shortage in medical supplies and protective gears to cope with the health emergency. In response, strict restrictions were put in place to curb the spread of the virus and these have drastically affected peoples’ lifestyles. However, there has been huge increase in the use of technology in business, education, religion and other activities as people adapt to the changing times in the sub-region. It is the argument of this paper that things cannot return to the way they were before the pandemic, but West African states must strategically plan for the Post COVID-19 era to survive the massive wave of unemployment, socio-economic meltdown and changes in lifestyle. The paper concluded that while the fight against the virus in the sub-region was not collective, post-pandemic recovery must be coordinated, strategically plannedamong member states. It was recommended that the governments should be flexible enough to retain the use of ICT and technology alongside the conventional ways of doing things in the post-pandemic era.
Undoubtedly, religion is one of the main factors that increasingly contribute to the shaping of international relations. As it was in the European middle ages, religion and geopolitics have always had ties of one sort or another. Imperialism and nationalist doctrines have found purpose and justification in religious differences and, religious zealotry was functioned to be both cause and consequence of the concentration of state power and the rivalries among existing competitors. The involvement of numerous religious groups and movements in the political scene led the situation to be extremely complicated. The purpose of this article is to see to what extent religion as a soft power has a role in forming international politics. Also, to discuss the role the superpowers and regional powers play in dealing with the question of religious issues. With an argument that these issues including religious conflicts are led by international and regional powers which function these groups in a proxy war to be part of their rivalry overpower, and to achieve their national interests through their foreign policies at the cost of considerable environmental degradation and a massive death toll of people.
This study examines and explicates the lexico-semantic parameters, which Joseph Edoki deploys to convey his themes in The Upward Path, his second novel. Edoki is a contemporary Nigerian novelist who is preoccupied with the socio-political problems in Africa with the hope of a brighter future. The novel is the story of Mr. Gaga, a Rhwandan American PhD student, on a fact finding mission in Savannah, an African country, for his Thesis entitled ‘’ Why Africa is Underdeveloped’’. For failing to portray Africa in line with the negative views about the continent in his proposal, Gaga’s supervisor recalls him back to America in anger. But in defense of his conviction and research findings about Africa, Gaga remains in Savannah to complete his Thesis. This study is of significance because as a linguistic study, it will serve as a springboard to future researches in the language of African literature. Moreover, the good governance, which Edoki presents in Savannah, the fictional country, in which the novel under study is set, is a blue print for the development of Africa.
The increasing involvement of women in the advancement of insurgency in Nigeria has become a thing of great worry. The question often asked is as to whether their involvement is induced or free-willed. The concept of consent is on different layers and one would imagine the extent of consent given before they become members of the sect or culprits. The different ways women have been used to perpetrate the activities of Boko Haram ranges from threats to abuse, Indoctrination to hypnotism and many others. Due to the subtle and unsuspecting nature of women, they form a good strategy for members of the sect. However, their involvement is not evidence against them as they face situations that almost deny them the opportunity to choose whether or not to subscribe to the forceful approach used by Boko Haram insurgents!.
The art of using language for public expression in order to persuade target audience to support development initiatives is a key reason for graphic communication. This requires communication actors particularly, the graphic encoder to know salient input and output variables of communication for effective mediation. However, the prevalence ignorance of these variables, often results in ineffective media production that is counter-productive to development. Therefore, this paper focused on production of practical rhetoric in graphic language for development programmes. The paper employed the critical-historical-analytic examination and content analysis methods. It introduced the reader to the need for practical rhetoric in visual communication. Furthermore, it highlighted the salient input and output variables that the graphic communication actor need be conversant with in order to produce visual rhetoric, using the McGuire’s Communication/persuasion Matrix. And it exemplified graphic media that result from application or neglect of the knowledge of the variables. The paper found that consideration of the variables afforded production of effective rhetoric in graphic language. The paper ended with the need for graphic encoders to internalize knowledge of the input and output variables and utilize it during the process of media production to generate visual rhetoric with desired effect.
The Niger delta of Nigeria has been besieged by a lot of crises, which have posed serious security risks to the region. This has adversely and seriously affected not only the region, but Nigeria in general. The processes of crude oil extraction in the Niger delta have resulted in ecological degradation and oil pollutions, thereby doing a lot of damages to the farmlands and fishing waters of the people, whose major occupations are farming and fishing. Petroleum, the main source of Nigeria’s revenue is obtained in the Niger delta. Yet, Deltans are confronted with a lot of problems; they are impoverished, exploited, neglected and marginalized despite the economic value of the region to the Nigerian economy. No serious or commensurate efforts are made by the government or the multinational oil companies operating in the region to compensate the people for the losses they suffer through oil pollutions. This has resulted in a lot of protests and violence, culminating in the social unrest in the region. To this effect, there have been reactions to the crises in diverse ways. Though such efforts have yielded little dividends, the crises have persisted. Niger delta deserves priority attention in terms of human and infrastructural developments. In the literary circle, some Nigerian literary artists have expressed concern over the issue with a view to creating awareness on the seriousness of the crises, and advancing suggestions that will proffer permanent solutions to the problems. This paper examines and expounds how Helon Habila deploys the mood system as a language tool in his novel, Oil on Water, to address the Niger Delta crises. He advances suggestions to put an end to the crises in order to restore peace, and enhance sustainable development in Nigeria.
The paper seeks to analyze the larger concept of multiculturalism and to further determine its role and importance in modern Georgia. The agenda of cultural diversity is often subject to criticism, accused for being responsible for endangering modern societies. Such statements will be critically analyzed within the context of the increasing far-right sentiments among Georgians, as reflected in a what can be described as a radical march which took place in Tbilisi on the 14th of July 2017, creating risks of further deteriorating of the situation in the country, given the general macro-economic instability of Georgia and undermining democracy. This paper concludes that it is very important to establish an innovative new model of Georgian citizenship, and one which will address all the accumulated misunderstandings now existing in society. It is expected that this will enable multiculturalism to be perceived more appropriately, i.e. as a unifying ideology rather than a dividing force.
The purpose of the research is to examine importance of Georgia’s current relations with its neighboring Russia and Azerbaijan and to estimate risks that deterioration of these relations can bring to Georgia’s economy. Of particular interest is to understand who stands behind the tensions happened in Georgia in the run-up to the tourist season of 2019 or at least to figure out possible motives behind the events. Interdependence of the states is analyzed through historical review of their relations and estimation of their current mutual interests. Considering risks and aspirations of the sides in the tensions, the motives behind are suggested. The data received depicts that none of these tensions were initiated by Georgia following its interests, on the contrary, its ruling party’s most visible achievement had been the ability to maintain positive and beneficial relations with both Russia and Azerbaijan. Thus, the Georgian government considered to be a victim in this case. The paper concludes that Georgian government is unable to react on provocations in a timely fashion due to absence of agreement in the ruling party and being quite fragile for outside forces that try to influence the country’s political processes. Unless Georgia manages to build more interdependent or less dependent relations with superpowers, it will be unable to avoid repetition of such manipulations.
This study explores a potential reposition of the triple helix model of university-industry-government relations in terms of micro-level analysis. In this direction, we evaluate the development of helix theory over time, by reviewing the relevant literature divided into three successive phases: the phase of theoretical foundation, the phase of conceptual expansion, and the phase of recent developments and systematic attempts of implementation. In this conceptual study, we estimate that a refocused triple helix model in terms of local development, by placing at the center of analysis the “living organization’s” dynamics in Stra.Tech.Man terms (synthesis of Strategy-Technology-Management), can be a possible direction of analytical enrichment.
This paper elaborates the hydraulic characteristics of the water supply network of the town of Puerto Ayora. First, it intends to replicate the household individual storage by simulating nodal tanks with the use of the EPANET software. Later, it uses the Pressure-Driven Approach (PDA) to develop a methodology that estimates the overflow of storage facilities, one of the main sources of wastage in Puerto Ayora. Finally, it uses the Demand-Driven Approach (DDA), with the aim of assessing the network in the future, under four population growth scenarios. With the chosen moderate growth scenario, two options are suggested in order to tackle the water supply issues at the end of the planning horizon.
More from International Journal of World Policy and Development Studies (20)
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financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
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Role in Financial System
NBFCs are critical in bridging the financial inclusion gap.
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Economic Impact
NBFCs contribute significantly to India's GDP.
They support sectors like micro, small, and medium enterprises (MSMEs), housing finance, and personal loans.
Exploring Abhay Bhutada’s Views After Poonawalla Fincorp’s Collaboration With...beulahfernandes8
The financial landscape in India has witnessed a significant development with the recent collaboration between Poonawalla Fincorp and IndusInd Bank.
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Can OPEC Cartel Reverse Crude Oil Price Downfall?
1. International Journal of World Policy
and Development Studies
ISSN(e): 2415-2331, ISSN(p): 2415-5241
Vol. 2, No. 12, pp: 90-93, 2016
URL: http://arpgweb.com/?ic=journal&journal=11&info=aims
90
Academic Research Publishing Group
Can OPEC Cartel Reverse Crude Oil Price Downfall?
Ibrahim A. Onour Department of Business Administration, School of Management Studies, University of Khartoum,
Sudan
1. Introduction
The sudden fall of crude oil prices from above $100 per barrel in early 2015 to less than $40 per oil barrel by the
end of the same year indicate oil prices slipping away from the control of the major producers of OPEC group.
Research on this issue attributes the recent oil price drop to a number of factors including, increase in global oil
supply, and fall of global demand for oil, stronger US dollar price, and random unpredictable factors such as political
unrest in major oil producing countries. Statistics on oil production indicate the period (2010 -2014) have witnessed
a remarkable increase in oil supply mainly due to the Shale technology revolution which increased US domestic
production by around 3.5 million b/d since the start of 2009, which regarded as a record increase for an individual
country during the whole history of oil industry1
. Beside the increased supply of oil in US, the increased refinery
capacity in US during the last five years accommodated the excess supply of oil, which may have adverse effect on
crude oil price, as refinery capacity expansion can mitigate excess supply constraints, and thus unleash flow of
excess production to oil markets2
.
The fall in the global demand for crude oil in the past few years also viewed as a major factor of recent oil price
drop. Energy efficiency and investment in renewable energy, such as solar energy viewed by some analyst as a major
factor contributed to demand for oil decline in the global markets. Furthermore, the adoption of more restrictive
monetary policy in the two major global consumers of oil, US and China, expected to curb liquidity availability for
investors in property, stocks and commodity markets as well.
Also indicated (Novotny, 2012) that there is an inverse relationship between the US dollar exchange rate and the
Brent crude oil price. As a result, appreciation of the US dollar in the past few years may have an adverse effect on
crude prices. This is because, among other things, since crude oil is priced in US dollar in international commodity
markets part of oil export revenue loss due to oil price decrease can be compensated partially by the rising dollar
value.
The current paper contributes to existing literature by expanding the determinants of crude oil price change to a
number of factors including increase in world demand for crude oil; appreciation in U.S., dollar value; increase in
OPEC production; increase in U.S., crude oil production; and a variable reflecting adverse random shocks. To
estimate the impact of each of these factors on oil price change time-varying coefficient estimation approach have
been employed.
1
The BP statistical review can be accessed at http:www.bp.com/statisticalreview.
2
Refineries are designed to operate efficiently using specific crudes such that prices of crude oil rises or falls based on the
availability of specific types of crude relative to existing refining capacity. Currently much of the world’s refining capacity is set
up to use light sweet crudes; heavy sour crudes represent much of the unused production capacity in OPEC.
Abstract: This paper employs time varying coefficient approach to assess sensitivity of crude oil price change
to a number of factors among which change in OPEC crude production and change in US oil production. Our
finding indicate crude oil price is inelastic to OPEC production change, with elasticity varying between 0.09 and
0.13, but elastic to US oil production change with elasticity between 0.99 and 1.05. This imply on average crude
oil price is about 8 times more responsive to US supply expansion than to OPEC supply decisions. As a result,
OPEC producers have a limited impact on oil price reversal but the withdrawal of the US high cost shale
technology producers from crude oil production at low price levels can be more effective driver of oil price rises
in the future. Such low level sensitivity of oil price to change in OPEC supply imply, other things remain
unchanged, for oil price to rise from the current $45 per barrel to $70 per barrel, OPEC cartel needs to cut its
current daily production of 27 million barrels by 8 percent.
Keywords: OPEC; Crude oil; Price downfall.
2. International Journal of World Policy and Development Studies, 2016, 2(12): 90-93
91
The remaining parts of the paper include the following. Section two highlights literature review, section three
discusses basic data analysis, section four illustrates the methodology of the research, section five includes results,
and the final section concludes the study.
2. Literature Review
Since 1970s oil market models offered analytical framework of oil shocks and their impact on the global
economy. The focus of most of these models is to produce projection of future prices or to assess the determinants of
oil shocks. MacAvoy (1982) is one of the first models that combines supply and demand with the purpose of
determining an equilibrium price that clears oil market. Amano and Van Norden (1993) uses small scale econometric
model to forecast oil prices for the years (1986 – 1991). Kaufmann et al. (2004) built a general equilibrium model to
understand Saudi government decision making and its influence, as a major producer of oil, on OPEC oil price
behavior, and estimated non-OPEC production as a function of geological forecast (based on logistic curve) and oil
price effects. (Dees et al. (2007); Dees et al., 2008), analyze short-run determinants of oil prices in OECD and non-
OECD countries as a function of income, exchange rates, and technological progress. Kaufmann (2007) indicate
there is a non-linear association between oil prices and refinery capacity utilization levels. Huppmann and Holz
(2009) employ an optimization model which uses production cost taken from Aguilera et al. (2009) to show that
when Saudi Arabia is assumed to be a dominant player in OPEC cartel, it receives oligopolistic profit while the rest
of OPEC producers gain competitive profit.
3. Data Analysis
Data employed in this study collected from BP statistical Review of World Energy and Index Mundi websites3
.
Variables underlying our analysis include Brent oil price, total crude oil production and consumption, global
refineries capacity expansion, and US$ dollar price per gold. The sample period covers annual time series data from
1965 to 2015. Summary statistics for each of these variables presented in table (2). As indicated by the mean and the
minimum/maximum values all variables in the table, especially oil prices and the US$ value, witnessed high
volatility (or shocks) during the sample period. The skewness and high values of kurtosis coefficients indicate the
distributions of variables characterized by positive skewness and peakness relative to a normal distribution. The
positive skewness results imply a higher probability for increases above its mean values during the sample period.
The Jarque-Bera (JB) test statistic provides evidence to reject the null-hypothesis of normality for all variables.
Phillip-Perron (PP) test results indicate, while there is evidence of random walk behavior for all variables at levels,
but there is evidence of stationarity of all variables at the first difference. Thus, to capture the random walk behavior
of each variable, residuals from AR(p) process for each variable (at the level) need to be estimated.
Table-1. Summary statistics
Oil price
US$/b
Production
(000 b/d)
Consumption
(000 b/d)
US$ Per
oz gold
OPEC
production
(000 b/d)
US production
(000 b/d)
Mean 48.39 65019 65883 414 26668 9129
Min/
Max
10.7
115
31798
86754
30811
91331
34
1668
13922
37427
6783
11297
Skewness: 1.04 2.39 3.26 0.33 0.60 1.88
Ex.Kurtosis: 3.44 11.54 17.4 3.93 3.51 8.0
JB test
p-value
26.5
0.000
259.9
0.000
573
0.000
24.7
0.000
21.8
0.000
130
0.000
PP test (level) -6.1 -8.81 -8.48 -2.67 -5.4 -0.97
PP test (1st
difference) -51.3* -45.3* -45.4* -45* -40.9* -38.5*
*significant at 5% significance level.
4. Methodology
As global oil market witnessed in the past decade a remarkable shocks, a potential candidate for capturing
structural change in coefficent values is time-varying linear regression models. For that purpose in this paper we
employed the Flexible Least Squares (FLS) method which designed to capture sinusoidal time-varying coefficient
patterns. The dynamic equations governing the motion of the coefficients in most cases is unknown, but in other
estimation methods (i.e OLS) it is assumed that change in coefficients evolve only slowly over time. In this regard
two types of model specification errors can be considered for the estimates of coefficients in FLS approach. Residual
measurement errors given by the deviation of the estimated values of the dependent variable from the observed
values; and residual dynamic errors, given by the discripancy between successive coefficient values. The FLS
solution is the sequence of coefficients estimate that yield the minimum sums of squared residual measurement error,
and squared dynamic errors. More specifically, consider a linear regression model with time-varying coefficients:
3
The BP statistical review can be accessed at http:www.bp.com/statisticalreview.
3. International Journal of World Policy and Development Studies, 2016, 2(12): 90-93
92
Where Yt is a column vector of oil price at time t, Xt is a matrix of explanatory variables of nXq order where q is the
number of explanatory variables, and et is a random error terms. The FLS method developed by Kalaba and
Tesfatsion (1989) finds the time paths of the coefficients which minimize the incompatibility cost function:
∑ ∑
Where is the time-path of coefficient vectors, is the sum of squared residual dynamic
errors, is the sum of squared residual measurement errors, and is smoothness weight. The OLS
extreme point occurs when , and equal weights apply when . The FLS solution is conditional on the
choice of the smoothness parameter.
A strength of FLS is its ability to capture turning points and other systematic time-variation in the coefficients.
Thus, FLS is an appropriate measure of non-linear regression even in cases of parameters nonlinearity that include
elliptical and sinusoidal behavior of coefficients. FLS can be compared with other structural break test models such
as Chow test and CUSUM of recursive residual tests. The Chow test requires the specification of a break-point and
assumes coefficient constancy over a sub-period. The CUSUM test suitable for global stability test, but compared to
FLS, does not identify the sources of instability. Another merit of FLS is that requires no distributional assumptions
on the error terms.
5. Results
To assess the long-term association between oil price change and OPEC and US crude oil production changes,
we employed the Autoregressive Distributed Lag (ARDL) test procedure developed by Pesaran and Shin (2001). An
important merit of the bound test, unlike other multivariate conintegration tests, such as that of Johansen and
Juselius (1990), it does not require cointegration of the same order of all variables, in other words it is applicable
regardless of whether the independent variables are stationary, (I(0), or random walk, I(1)4
.
The cointegration result of crude oil price with the five variables: change in world demand for crude oil; change
in US dollar price; change in OPEC crude oil production; and change in US crude production indicate ARDL test
result of 4.46, which reject the null of no cointegration at the 5% significance level.
FLS estimation results of equation (1), based on log transformation of all variables, reported in table (2) reveal
the mean coefficient values for each of the explanatory variables as well as the standard deviation and the coefficient
of variation statistics. FLS mean coefficients indicate, on the demand side, 1% increase in world demand for crude
oil, push crude price upward by 2.7% and 1 percent in US dollar appreciation against gold (or other convertible
currencies), reduce crude price by 0.08%. However, on supply side, 1% increase in OPEC production, reduce crude
price by 0.12%, and 1% increase in US crude oil production reduce crude price by 1.03 %. The last result indicate
crude oil price is more responsive to US supply expansion than to OPEC supply decisions. The effect of adverse
random effects on crude oil price is estimated as 1.07 %. The proximity of the two coefficients of 1.03 % and 1.07 %
is consistent with the observation that the drop in oil production due to political unrest in countries like Libya, Syria,
and Iraq is almost equal to the increase in the US Shale production in the past five years.
Table-2. FLS parameter estimates
explanatory
variables*
Coefficients
(min/max)
mean
Std. deviation coefficient
of variation
X1
mean
(2.69 to 2.72)
2.70
0.008 0.003
X2
mean
(-0.17 to -0.03)
-0.08
0.04 0.058
X3
mean
(-0.13 to -0.09)
-0.12
0.02 -0.18
X4
mean
(-1.05 to -0.99)
-1.03
0.02 -0.02
E
mean
(0.98 to 1.14)
1.07
0.04 0.04
Constant 0.01 0.15 11.4
*Since double log function form is specified, the regression coefficients represent elasticities.
*X1= increase in world demand; X2=appreciation in US$ price per gold oz;
X3= increase in OPEC production; X4= increase in US production; E= adverse random shocks.
4
But inconclusive if the order of integration of the variables of order two, or more
4. International Journal of World Policy and Development Studies, 2016, 2(12): 90-93
93
6. Concluding Remarks
To explain the causes of recent crude oil price falls in this paper we employed Flexible Least Squares method
taking change in crude oil price as dependent variable and independent variables including change in world demand;
change in US dollar price; change in OPEC supply ; change in non-OPEC supply ; and finally a random walk
variable (E) reflecting non-predictable events5
.
FLS estimation results indicate, on the demand side, 1 percent increase in world demand for crude oil, increase
crude price by 2.7 percent and 1 percent US dollar appreciation against gold (or other convertible currencies), reduce
crude price by 0.08 percent. On supply side, 1 percent increase in OPEC production, reduce crude price by 0.12
percent, and also one percent increase in US crude oil production reduce crude price by 1.03 percent, indicating that
crude oil price is more responsive to US supply expansion than to OPEC supply decisions. The effect of adverse
random effects on crude oil price is estimated at 1.07 percent. The proximity of the two coefficients of 1.03 percent
and 1.07 percent is consistent with the observation that the drop in oil production due to political unrest in countries
like Libya, Syria, and Iraq is exactly equal to the increase in the US Shale production in the past five years. The
sensitivity of oil price to change in OPEC supply indicate, all other things remain unchanged, for oil price to rise
from the current $45 per barrel to $70 per barrel, OPEC cartel needs to cut its current daily production of 27 million
barrels by 8 percent, which is about 2.2 million barrels per day.
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5
Since Phillips-Perron test show oil price is non-stationary at the level, then random walk variable has been measured using the
residual error terms resulting from the AR(1) process of oil price.