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Risk perception and oil and gasoline markets under COVID-19

Behzod B. Ahundjanov, Sherzod Akhundjanov () and Botir B. Okhunjanov

Journal of Economics and Business, 2021, vol. 115, issue C

Abstract: The novel coronavirus (COVID-19) exposed individuals to a great uncertainty about its health and economic ramifications, especially in the early days and weeks of the outbreak. This study documents oil and gasoline market implications of individuals’ behavior upon such uncertainty by analyzing the relationship between Google search queries related to COVID-19—information search that reflects one's level of concern about the subject (risk perception)—and the performance of oil and gasoline markets during the pandemic. The empirical analysis based on daily data and a structural vector autoregressive model reveals that a unit increase in the popularity of COVID-19 related global search queries, after controlling for COVID-19 cases, results in 0.083% and 0.104% of a cumulative decline in Dow Jones US Oil & Gas Total index and New York Harbor Conventional Gasoline Regular spot price, respectively, after one day, 0.189% and 0.234% of a cumulative decline after one week, and 0.191% and 0.237% of a cumulative decline after two weeks. The reaction of Brent and West Texas Intermediate crude oil prices to the spike in COVID-19 related online searches is found to be statistically insignificant, which can be explained by oil price pass-through into gasoline spot price.

Keywords: Coronavirus; Google Trends; Risk perception; Oil prices; Gasoline prices; Energy markets (search for similar items in EconPapers)
JEL-codes: G15 I10 Q41 Q43 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jebusi:v:115:y:2021:i:c:s0148619520304239

DOI: 10.1016/j.jeconbus.2020.105979

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