Understanding the Crude Oil Price: How Important Is the China Factor?

Mu, Xiaoyi; Ye, Haichun

doi:10.5547/issn0195-6574-ej-vol32-no4-1

Cited by 9 publications

(9 citation statements)

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“…6 This difference also exists if one uses the shorter sample period of 1998M1 to 2010M6 of Mu and Ye (2011). The latter study concentrates solely on the effects of Chinese demand shocks, while the current study covers the whole EMA.…”

Section: Resultsmentioning

confidence: 97%

“…Without estimating the size of this effect, Hamilton (2009) and Smith (2009) argued, based on anecdotal evidence and some theoretical oil market considerations, that Chinese and EMA demand dynamics were important factors in the surge in global oil prices in the 2000s. Turning to more formal methods of analysis, Mu and Ye (2011) used a vector autoregression (VAR) model to assess the importance of Chinese crude oil imports for global oil prices. The paper finds, perhaps somewhat surprisingly, that these imports have not been a significant driver of crude oil prices over the sample period (1997 to 2010), and China's oil demand only played a small role in the oil price rise that occurred prior to the global financial crisis.…”

Section: Chartmentioning

confidence: 99%

“…The approach taken in the current study differs from other recent empirical studies in the way it handles the EMA oil demand variable. In some of the existing studies (for example, Mu and Ye (2011)), EMA oil demand is defined in terms of oil consumption data.…”

Section: Chartmentioning

confidence: 99%

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What is the Role of Emerging Asia in Global Oil Prices?

Melolinna

2014

SSRN Journal

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This paper studies the effects of demand shocks caused by Emerging Asian (EMA) countries on oil prices over the past two decades, using vector autoregression models. The analysis builds on previous work done on identifying different types of oil shocks using structural time series methods. However, uniquely, this paper introduces a commodity demand indicator for EMA economies that is based on data independent of oil production and consumption data, thus properly accounting for oil demand pressures stemming from macroeconomic conditions in the EMA economies and the rest of the world. The analysis strongly suggests that EMA demand shocks have had a persistent and statistically significant effect on the level and variation of global oil prices over the past two decades. This result differs from some of the previous literature and hence proves that the choice of oil demand indicator in an oil-market VAR makes a material difference for the results. Furthermore, tentative evidence suggests that the effect of EMA demand is mainly driven by demand dynamics in China. The results of the benchmark model are robust to different sample periods and to variations in the definition of the oil demand indicators, as well as to an alternative identification strategy based on sign restrictions.

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Section: Resultsmentioning

confidence: 97%

Section: Chartmentioning

confidence: 99%

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What is the Role of Emerging Asia in Global Oil Prices?

Melolinna

2014

SSRN Journal

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“…17 According to China's oil pricing mechanism mentioned above, the road transport sector at the provincial level has no say at all in oil (or fuel) pricing as a matter a fact. In current literature, empirical studies (Mu & Ye, 2011;Chen et al, 2009) also show that China has no pricing power over international oil prices. As a consequence, the road transport sector in China is merely price taker rather than price maker.…”

Section: Fuel Demand Elasticitiesmentioning

confidence: 99%

Fuel demand, road transport pollution emissions and residents’ health losses in the transitional China

Yang

2016

Transportation Research Part D: Transport and Environment

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In recent years, China's rapid economic growth resulted in serious air pollution, which caused substantial losses to economic development and residents' health. In particular, the road transport sector has been blamed to be one of the major emitters. During the past decades, fluctuation in the international oil prices has imposed significant impacts on the China's road transport sector. Therefore, inspired by Li & Zhou (2005), we propose an assumption that China's provincial economies are independent "economic entities". Based on this assumption, we investigate the China's road transport fuel (i.e., gasoline and diesel) demand system by using the panel data of all 31 Chinese provinces except Hong Kong, Macau and Taiwan. To connect the fuel demand system and the air pollution emissions, we propose the concept of pollution emissions elasticities to estimate the air pollution emissions from the road transport sector, and residents' health losses by a simplified approach consisting of air pollution concentrations and health loss assessment models under different scenarios based on real-world oil price fluctuations. Our framework, to the best of our knowledge, is the first attempt to address the transmission mechanism between the fuel demand system in road transport sector and residents' health losses in the transitional China.

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“…One focus of these many papers is to what extent speculation caused the 2008 oil price surge, e.g., Hamilton (2009), Kilian (2009Kilian ( , 2010, Kesicki (2010), Kaufmann (2011), Büyüksahin and Harris (2011), Lammerding et al (2013) and Hache and Lantz (2013) The result of this literature (not restricted to this sample) is mixed. Quite a number of papers focus on related specifics: Mu and Ye (2011) focus and reject the China factor' as explanation of this price surge, Salisu and Fasanya (2013) find and link the structural breaks to the Iraq/Kuwait conflict (1990) and the financial crisis in 2008, and Wang et al (2011) test whether GARCHtype models (widely used in this literature) can well capture the long memory in the volatility of oil price (WTI) returns; others investigate oil price link to exchange rates, gold prices, etc.…”

Section: Introductionmentioning

confidence: 99%

Output adjusting cartels facing dynamic, convex demand under uncertainty: The case of OPEC

Wirl

2015

Economic Modelling

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Understanding the Crude Oil Price: How Important Is the China Factor?

Cited by 9 publications

References 1 publication

What is the Role of Emerging Asia in Global Oil Prices?

What is the Role of Emerging Asia in Global Oil Prices?

Fuel demand, road transport pollution emissions and residents’ health losses in the transitional China

Output adjusting cartels facing dynamic, convex demand under uncertainty: The case of OPEC

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