How do environmental concerns and global economic conditions affect energy prices?

Sami Ben Jabeur, Sabri Boubaker, Pedro Carmona and Nicolae Stef

Energy Policy, 2025, vol. 204, issue C

Abstract: The price of oil can be a catalyst for the transition to a low-carbon economy as it may encourage households, firms, and local authorities to adopt a greener behavior. However, anticipating the mechanisms that drive oil price fluctuations is difficult. The oil market represents a complex system where different components can be subject to nonlinear dynamics that affect the system's structure. In this framework of the complexity theory, we utilized the quantification of asymmetric dependence (qad) method and fuzzy set qualitative comparative analysis (fsQCA) to investigate the simultaneous impact of different factors on the monthly crude oil price. Our findings reveal that a combination of conditions – including strong global economic conditions, low awareness about climate change concerns, and minimal change in global surface temperature – is strongly linked to higher crude oil prices. Additionally, the fsQCA analysis identified three major conditions that are necessary to attain a high level of oil price, namely improved global economic conditions (1), low levels of geopolitical risks (2), and low levels of real interest rate (3). This paper highlights how policymakers, financial institutions, and analysts could use fsQCA to assess the simultaneous influence of independent factors on Brent trading prices.

Keywords: Brent; Global economic conditions; Climate change concerns; Fuzzy set qualitative comparative analysis; Copula-based dependence (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:204:y:2025:i:c:s0301421525001879

DOI: 10.1016/j.enpol.2025.114680

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