Petroleum is the most important energy source in all countries, especially in developed and developing countries. The importance of crude oil is that it uses the everyday activity of the individual and the nation's economic development. Later China and India's GDP shows that both countries are growing faster and the large consumer of oil is on the world market. Therefore, rising oil prices will inadvertently affect the GDP and the economy of the countries. In the course of 2008, world oil prices have experienced an increase in oil prices, which threaten the world economy, thanks to the financial crisis, recessed by the recession. It may be that increasing and decreasing the impact of global oil prices requires studying the impact on the world economy and the impact of alternative energy sources.
OPEC reports that oil prices came when there was no oil shortage at all. Volatility has been recognized in every chapter, including energy, metals or agricultural products, since prices have doubled since 2005. OPEC reports that since 2003 it has increased the oil price by $ 4 and has further increased it by 1 mb / d due to a complete lack of oil in the market. (World Oil Outlook, 2008)
There are some reasons for rising crude oil prices
Several elements have led to this volatility in crude oil prices. Disregarding supply and demand, the fluctuation in dollar value was the main cause of rising oil prices. Ray and Olga (2004) reported that oil prices are one of the most important developments in the world economy, which generate inflation and recession as in 1974 and 1979, which resulted in a slowdown in the global economy. According to Chandrasekhar (2005), the primary cause of rising crude oil prices is the rapid development of the United States, China and India, which forces the industry to subtract and refine the oil. It was also reported that global demand rose by 2.7 million barrels a day in 2004, the highest since 1976. Fiscal factors include Iraq's occupation by Iraq, Saudi Arabia is temporarily affected by oil supplies by terrorists, speculative financial investment investors
Reduction of OPEC's surplus oil production capacity
Growth in global oil demand led to oil-producing countries produce more oil to meet your needs. The above figure shows that oil production in the OPEC countries has drastically decreased; this demand / supply factor is the main reason for raising the price of crude oil, which raises $ 140 per barrel (Hiromi Kato, 2005)
According to BP's World Energy Product for 2007, the world's 83.7 million barrels / day or 3.9 billion tonnes / year, which is five times the annual household water consumption. The figure above shows that rising demand led to a rise in oil prices, which means the mid-2005 and mid-2005 missiles. As mentioned above, oil prices did not rise at the end of 2000, but in Asian countries, due to increased demand, crude oil prices rose.
Oil price evolution
Roncaglia uses Hotelling theory to explain that the equilibrium price of scarce resources without extra cost increases over time, equal to the interest rate each year. This statement shows that the price of scarce raw material is increasing annually with the added interest rate. Crude oil is an important element in the growth of the world economy. They learn that merchant merchants are responsible for oil prices that offer oil futures contracts by examining current oil exploration, oil stocks, knowing what's available and demand for oil is mainly from the United States (Kimberly Amadeo) In 2008 According to the OPEC Monthly Oil Market Report published in August, OPEC Reference Basket (ORP) rose to $ 2.89 in July 2008 and rose by 2% to $ 131.22 / b, weakening the US dollar and growing geopolitical tensions.
However, due to the weaker economic conditions, the upturn in the US dollar and increased OPEC exports of rock, the price is low for three months, for $ 109. According to OPEC, the world economy will grow by 3.8% in 2009 and 3.9% in 2008. It also means that the growth rate of developing countries does not change at 5.6%. India's growth grew by 7.7% compared to the unchanged China by 9.2% (www.opec.org). The graph shows the trend of crude oil prices between 2006 and 2008. The figure shows that in 2006 oil prices ranged from $ 50 to $ 70 per barrel, between $ 50 and $ 90 per barrel in 2007.
Oil price growth is seen in the fourth week of August 2007, ending at $ 90 at the end of 2007. This trend continued in 2008 with a value of $ 140 a barrel in the second week of July. Of the OPEC suppliers, however, some control factors and export growth made it easier to lower the price of crude oil to $ 118 per barrel in the fourth week of August 2008. (Www.opec.org)
Annual Average Growth in Oil Consumption
The table above shows that China is the most significant oil consumer, growing between 1974 and 2003 at a 6.0% growth rate. The table shows that the majority of nations increased consumption between 1974 and 2003, but the world's total consumption increased by 1,1% in 2001, and by 1.5% between 1991 and 2000, by 0.4% decreased. The total annual increase in oil consumption increased by 1.1% between 1974 and 2003. (Ray and Olga, 2004) Crude oil prices are influencing trade conditions, as the higher dependence of imports of oil increases the nation's GDP impact, the savings and investment impact is higher, tax revenue and solvency can be influenced
in 1973 and a raw price of 1981 was led by the US for its post-embargo energy policy. Crude oil prices plummeted as a result of the September 11 attack, which weakened the American economy and cut the quota by 1.5 million barrels a day. The figure explains the factors that cause oil prices to rise from $ 30 per barrel to 2005-2006 (www.wtrg.com). Several factors have led to a rise in oil prices directly between the Iranian countries – the war in Iraq, the great depression, the Venezuelan crisis, the hurricane bay, increased demands, etc. As a result of oil prices, the consequences for alternative energy sources need to be evaluated.
According to the OPEC report, developing countries maintained their demand for oil in 71% of total global oil demand growth in 2007. It was also mentioned that OECD stocks fell by 66 million tonnes to 4111 MB by the end of 2007. (OPEC, 2007)
Impact of Growing Oil Prices on Stock Exchange
Oil price shocks affect economies differently than supply, demand, and trade. (Martin Schneider) Basher and Sardosky (2006) view oil as the age of modern economics (Mehmet, 2009). The world is globalized in all respects and people are looking for livelihoods and jobs. In this scenario, the task of nations is to ensure employment and better living conditions, which means urbanization and modernization. Growth in population automatically for many industries, homes, vehicles, transport, etc. Lead, which drives the oil as the primary product to run the economy. Basher and Sardosky (2006) report that China, Turkey and India are the fastest growing economy and are expected to seek and consume the bulk of the world's oil (Mehmet, 2009)
Oil Consumption Turkey, China, India USA and the World  The table above shows that the United States is the most developed country with 23.9% of total world consumption in 2007. While the world's total oil consumption in China, India and Turkey was only 13.4% in 2007, 9.3% in China, 3.3% in India and 0.8% in Turkey.
Many experts have stated that oil price changes and shocks have a direct or indirect impact on economic activity. According to Mehmet (2009), rising oil prices will lead to an increase in production costs, which reduces productivity and productivity growth. The rise in oil prices will lead to increased money demand, rising inflation, falling investment and lower GDP.
Due to the growing global demand and political uncertainty in oil-rich countries, concerns about global warming are behind the rise in oil prices, which can boost the supply of higher demand and alternative energy. The development process leading to industrialization has increased concentrations of atmospheric CO2 concentrations, which have a significant impact on the movement of oil prices. Such developments in the rising atmosphere of oil prices, consumption and carbon dioxide emissions attach critical importance to understanding the development of alternative energy in the coming years and the impact of oil prices on the stocks of alternative energy suppliers (Henriques and Sardosky, 2007)
Auto regression analysis
The above-mentioned discussions show that oil prices have a strong influence on alternative energy. Several studies have been carried out by many researchers to get acquainted with the effects. Henriques and Sadorsky (2007) investigated empirically the relationship between alternative stock companies' stock prices and oil prices by vector autoregression (VAR). The WilderHill Clean Energy Index (ECO) was used to measure the stock market performance of alternative energy companies. The Arca Technology Index (PSE) is used to measure the performance of technology companies. The researcher sets the starting point to 100 for ease of comparison so that price changes and its effects can be measured. The following figure shows clearly that, although from January 2001 to April 2007 there is a rapid, drastic and high oil price rise, stock market prices for technology companies (PSEs) and alternative energy sources (ECO) are not all affected and unchanged.
The findings of Henriques and Sadorsky, shown in the figure, show that the ECO correlated with the 0.83 coefficient with PSE and the correlation between ECO and oil prices was 0.43. Another VAR analysis consisting of four variables ECO, PSE, United States West Texas Mid-Level Oil Prices (OIL) and RATE. The researcher in order to reduce the confusion of the above variables in natural logarithms such as LECO, LPSE, LOIL and LRATE. Granger Casualty tests using LA-VAR have shown that alternative energy prices are explained by historical changes in oil prices, technological stock prices and interest rates. Studies have shown that delayed interest rates have significantly influenced oil prices as a result of increasing economic growth.
Henriques and Sadorsky (2007) found through the four variables VAR that the movement of oil prices was not important, investors were confident of alternative energy companies like technology companies. It shows that an interest rate shock shock has had a positive and significant impact on alternative energy prices, and a standard scattering shock of the price of energy prices has had the same impact on technological stock prices. The simulation shows the results of the autoregression analysis by Henriques that the stock market prices of shocked alternative energy companies had an impact on the stocks of technology companies but had no effect on oil price shocks.
Rafik and Sonia (2008) tried to estimate oil prices and the macroeconomic sector by analyzing the impact of recent oil price fluctuations in the Tunisian economy through the VAR model from 1993-1999 to3Q3. It has found that oil prices have no impact on economic activity. The main cause of the economic shock was the government spending leading to the economic recession, the allocation of subsidies meant the shock of oil prices as the most serious source of violence. According to the report, the impact of oil price shock on economic activity is indirect.
Kilian (2007) argued that the regression of macroeconomic aggregates at unexpected energy prices is likely to be misleading as it does not take into account the added value of energy added.
According to Kilian's analysis, most oil prices As a result of shocks, global demand for strong industrial demand combined expectations for crude oil demand. It was also argued that the lack of crude oil is inevitable in the circumstances of the excessive future demands of crude oil. Another finding by Kilian is that demand shocks driven by demand-driven precautionary measures – unlike other oil needs and supply shocks – may have an immediate impact on the US economy. Another observation in Kilian's work was that the effects of energy price shocks weakened, which resulted in a decrease in total real consumption from 30% in 1987 to -0.08% in 1987.
In another empirical effort, the stock market shocks of the United States and 13 other European countries concerned data on OECD stock prices, short-term interest rates, consumer prices and industrial output. The researcher uses an unlimited VAR model with four variables, such as the first log difference of the short-term interest rate (r), the real oil price (op), the first logarithm of industrial production (ip) and the real return on equity (rsr): VAR , ip, rsr). (Jung Wook et al., 2007) According to the above VAR analyzes, the researcher shows that shocks in oil prices do not have direct or indirect alternatives to alternative energy, but shocks to energy reserves have had a significant impact on technology stocks
Crude oil becomes more and more important to the world economy and generally to individual economies. It works as a dietary nutrition to make its world economy healthy. Increased oil prices have a strong impact on the world economy due to employment, rising inflation and the decline in dollar value, all of which are related to the economic downturn. Robert and Pavlos (2008) concluded that although oil markets and the current market were between 1970s and 1980s, oil prices are unlikely to fall. Henqriques (2007) suggests that governments set up frameworks and policies that promote alternative energy through fiscal policy and pay carbon tax and support alternative energy. This encourages farmers to gain carbon-free energy in order to benefit from the subsidized purchase of alternative energies.
However, crude oil prices have recently declined but are likely to grow as world demand grows day by day, and more importantly, the Asian counties, China and India, the most dynamically developing economies in the world, need it vigorously. Through various autoregressive analysis of different types of researchers, it can be assumed that the share price of alternative energy companies is not affected, which is beneficial to investors.
Source by sbobet