Exploring the Relationship between Crude Oil Prices and Renewable Energy Production: Evidence from the USA

Leonid Sorokin, Svetlana Balashova, Konstantin Gomonov () and Ksenia Belyaeva
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Leonid Sorokin: Department of Economic and Mathematical Modelling, Peoples’ Friendship University of Russia (RUDN University), 6 Miklukho-Maklaya Street, Moscow 117198, Russia
Svetlana Balashova: Department of Economic and Mathematical Modelling, Peoples’ Friendship University of Russia (RUDN University), 6 Miklukho-Maklaya Street, Moscow 117198, Russia
Konstantin Gomonov: Department of Economic and Mathematical Modelling, Peoples’ Friendship University of Russia (RUDN University), 6 Miklukho-Maklaya Street, Moscow 117198, Russia
Ksenia Belyaeva: Department of Economic and Mathematical Modelling, Peoples’ Friendship University of Russia (RUDN University), 6 Miklukho-Maklaya Street, Moscow 117198, Russia
Authors registered in the RePEc Author Service: Светлана Алексеевна Балашова

Energies, 2023, vol. 16, issue 11, 1-24

Abstract: This study aims to examine the short-term and long-term relationship between WTI oil prices and renewable energy production considering U.S. crude oil production, world oil prices, and other domestic and global factors. We employ several time-series analysis techniques, including the augmented Dickey-Fuller test and the Phillips-Perron test for unit roots; the long-term relationship is examined using fully modified OLS (FMOLS) and Park’s canonical cointegration regression (CCR). We also utilise an error correction model (ECM) to distinguish between short- and long-term effects. It is shown that at a constant level of crude oil production, an increase in energy production from renewable sources is accompanied by an increase in oil prices. Thus, at this stage of development, despite the increased production, renewable energy can be considered as complement to but not a substitute for crude oil. Our empirical estimations allow us to conclude that renewable energy production today is pushing the price of oil up rather than lowering it.

Keywords: oil prices; renewable energy; cointegration; ECM (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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