From Supply-Chain Disruptions to Speculative Exuberance: How Energy Transportation Uncertainty Drives Oil Price Bubbles

Ufuk Can (), Oguzhan Cepni, Rangan Gupta and Onur Polat ()
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Onur Polat: Institute of Informatics, Hacettepe University, Beytepe Campus, 06800 Cankaya, Ankara, Turkiye

No 202608, Working Papers from University of Pretoria, Department of Economics

Abstract: This study examines how a newspapers-based index of energy transportation uncertainty (ETU) has historically influenced extreme fluctuations in West Texas Intermediate oil prices from November 1982 to May 2025. We apply the Multi-Scale Log-Periodic Power Law Singularity model to identify both positive and negative bubbles across short-, medium-, and long-term periods. We then isolate structural ETU shocks with a Structural Vector Autoregression model and trace their dynamic impacts on six bubble indicators using Local Projections. The results reveal that the impact of energy transportation uncertainty is asymmetric and horizon dependent. While short- and medium-term responses are predominantly noisy or initially suppressive, ETU triggers a highly significant, delayed surge in long-term positive bubbles, eventually followed by an increased probability of downside corrections. This demonstrates that physical transportation disruptions operate largely through an expectations channel, gradually transforming fundamental scarcity concerns into self-reinforcing speculative boom-bust cycles. These findings underscore the need for policymakers and market participants to treat transportation uncertainty as a distinct channel, requiring horizon-specific hedging and resilient infrastructure to mitigate expectation-driven market fragility.

Keywords: Multi-Scale Positive and Negative Bubbles; Oil Market; Energy Transportation Uncertainty; Local Projections (search for similar items in EconPapers)
JEL-codes: C22 E50 Q41 (search for similar items in EconPapers)
Pages: 11 pages
Date: 2026-03
New Economics Papers: this item is included in nep-ene and nep-tre
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