Major Contribution to the Literature:
The paper organized by the author has an in-depth relationship with other literature works on the subject of Oil Breaks and Price Trends. Firstly, it has used the Kejriwal and Perron’s sequential procedure to determine the multiple structure changes in real oil prices. However, the author avoided the circular testing problem. In fact the Kejriwal and Peron model allows the repeated use and selection of a number of breaks in the trend and in the level of a univariate time series without any prior knowledge as to whether the noise component is stationary or not.
Thus, the author, in order to officially deal with the circular testing problem ,used the stability tests suggested by Vogelsang and Harvey. Apart from these academicians, Perron and Yabu developed an alternative test with higher power and less size distortions. They used a super efficient estimate of the sum of the auto-regressive parameters and the break date is unkown. The model works by improving the finite sample properties where a bias corrected version of the OLS estimate is used. Thus, based on Perron and Yabu and the other testing strategies of Bai and Perron, Kejriwal and Perron during 2010 a sequential procedure to test the null hypothesis to test the null hypothesis of l changes against the alternative hypothesis of (l+1) changes.
The second contribution by this work is that the author performed a diagnostic check through a regression analysis in order to detect the significance and magnitude of the potential breaks detected. Also by incorporating the information found on structural changes, the literature methodology undertakes the unit root tests to check for stationirity. The literature is also well recommended as ...
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...0) (0.00) (0.10)
0.79 0.02 0.08
(0.00) (0.82) (0.86)
-151.7 109.6 109.9
(0.01) (0.00) (0.00)
1.00 0.67 0.96
(0.00) (0.00) (0.00)
0.08 0.32 0.45
(0.00) (0.00) (0.00)
t -0.06 -0.01
(0.00) (0.00)
t2 0.00002 0.00003
(0.00) (0.00)
AIC 5.540 4.074 4.637 4.230
BSC 5.613 4.162 4.731 4.315
p-values are shown in parenthesis below the coefficient
TABLE 4. TIMELINE BREAKS
Variable Coefficients Level Slope
Initial 51.9 51.9 0
Jan 1878 -30.0 21.9
Jan 1895 15.3 37.2
Jan 1913 14.5 51.7
Apr 1921 -9.82 41.88 -0.01
Mar 1930 -6.81 35.07
Aug 1946 -8.46 26.61
Feb 1974 32.8 59.41
Jul 1979 51.4 110.81 -071
Feb 1986 -20.7 90.11 0.23
Feb 1991 -7.81 82.3 -0.05
Jul 1998 -14.5 67.8 0.56
Nov 2008 -40.7 27.1 1.58
The major weakness of ConocoPhillips is not having a stable income or earnings. The oil price is highly affected by small change in economic phenomena of the world so this high volatility of price will often make the earning prediction wrong. The unlevered beta of the ConocoPhillips is comparatively higher than that of industry with 1.21, which shows that the company is highly susceptible to market conditions. When the economic conditions are well above the normal, then price of oil upsurges thereby increasing the profits above expectations while negative is the case in poor economic condition. This dependence of income on oil prices possess risk to company’s business model and shows that the business is exposed to a higher degree of risk. Having almost complete dependence on oil for business, there is no way that company ca...
Since Japan started to import LNG as a way to decrease its dependence on crude oil, LNG price mechanism has close tie with crude oil price. The LNG price in Japan and other Asian countries is determined by based on a pre-fixed price formula. Japan’s average crude oil import price is used as a benchmark of the pre-fixed price formula along with some other key components to reflect market conditions. Therefore, Japan’s LNG import prices are directly influenced by Japan’s crude oil import prices. Higher crude oil prices since early 2011, caused by instances of political instability such as the Arab Spring and Iranian nuclear crisis, have resulted in higher LNG prices in the Asian market.
I am a husband and a father of four lovely children. We need a large vehicle to haul all of us around town. And of course I would do anything to keep them safe and I always want to provide them with the best. Therefore, after the birth of our fourth child two and a half years ago, my wife and I decided to upgrade our Ford Explorer to a Ford Expedition. We got everything from the side-curtain airbags to the TV and DVD player. What we did not know was we also purchased a rather large unleaded gas bill. The first time we filled the tank it cost us roughly $35; today it costs us right around $75 to fill the tank. Obviously the price of gas has increased significantly in the last two years. The price increase is due to a fluctuation in the supply and demand of not only gasoline but also crude oil, which is needed to manufacture gasoline. In addition, several other factors are influencing a change in the price of gasoline.
At first sight, the viewer will notice the group of three men herding their camels in an environment which looks very hot and arid. By examining the three men more closely, the viewer will notice the style of clothing they are wearing. All three men in the picture are wearing some sort of head piece and a rob-like style of clothing which is similar to a dishdasha and a shalwar kameez that Muslim men wear. In the background of the picture, the viewer will notice a growing city with many infrastructures being built. There are also power lines going across the top of the picture as well all along the background near the city. The contrast between the old and the new is very evident in the picture; therefore, the viewer might conclude that the picture is saying that, regardless of modernizing the city, it still manages to keep the old traditions of the country intact.
Over the last five to seven years, the American people have had to pay outrageous prices at the gas pumps, wildly fluctuating from under $2.00 a gallon or less to paying $4.00 a gallon or even higher for gasoline. This issue of paying unreasonable and unpredictable prices at the pump comes from the higher prices of oil. Most will say that oil prices fluctuate so because of conflicts in the Middle East or due to shortages of oil, but the simple reason of the oil prices go up so high is because of oil speculation. Oil speculation is the single greatest problem of higher gas prices further causing more economic problems and compounding living for the middle and lower class individuals and families. The economical truth is that speculation is not a necessary thing. In fact, it inhibits the economic growth of the nation and will either stifle or completely suppress any economic growth or recovery. The solution to this problem is essential to the survival of the future of the United States’ economy and industrialization.
Bunn and Ellis suggested that comparing the probability of price change in a different period could help them find if the time-dependent models match their data. These models have the same probability on price flexibility in each stage. There are two ways to examine this one is comparing the frequency of price adjustment in different time period; the other is to draw the diagram of the hazard function.
The process of oil pulling is relatively simple. What’s important to remember is the technique and to practice consistency.
When a recession does not occur, it can be concluded that the economy is not experiencing a true business cycle but is in a continuous expansion. The rate at which the economy is evolving can be assesse...
According to the website of Oil-Price, today’s value for a barrel can be bought at the price of $41.25 this means that oil is not demanded as much as it used to be over the years, because of the awareness of the environment and also because it is a cyclical phenomenon, there’s no actual reason, but the price will eventually rise again. Since oil is used to produce gas, it would come with surprise if the price of gas is low since the oil cost are also low. Gas prices depend on oil costs and oil costs depend on
The OLS linear regression analysis is a crucial statistics tool to estimate the relationship between variables. Usually, the estimator indicates the causality between one variable and the other (A Sykes, 1993) (e.g the product price and its demand quantity). This report will analyzes the product ‘Supa-clean’, a new cleaning agent in Cleano-max PLC, though two model: a demand function and a multivariate demand function. After analysing the estimator, the weakness and the room of improvement of this statistics tool will be discussed.
The unrest in the Middle East would be a valid disruption in normality of prices if the Middle East were exporting less oil than it did before the many revolutions. However, Saudi Arabia has said it will make up the difference in the supply if the supply were to drop of significantly (source). Other members of the Organization of the Petroleum Exporting Countries (OPEC) have vowed to “do more” if the region continues to become destabilized. Libya for example only accounts for 2% of the world’s resource of oil (source). Libya’s oil is special only because it contains 0% to .5...
record. The spike in oil prices, up by over 60% since the start of the
In conclusion, the supply and demand of oil is a complex issue that depends on several factors. Geopolitical affairs are the major issues that affect supply and demand of oil. Geopolitical factors include wars, uprisings and political inconsistencies in the world. Other factors that influence the demand and supply of oil include market domains, availability of oil, recession and the world GDP. Since 1859, the price of oil has been inconsistent. Despite the fact that oil prices increased and fell, there has been a considerable rising trend in those prices. In most cases, the falling of the price reaches the previous price level. However, increase of prices goes beyond earlier prices. This trend has seen oil prices rise over the years. With this in mind, it is clear that by 2020 the real price of oil will be more than 200 dollars.
For any consumer who owns a vehicle and has to commute daily, the rise and fall of gas prices can be difficult to comprehend. In order to understand the variances for gas and oil prices, one must evaluate the core reasons for the fluctuation. According to recent research, the quick changes in oil and gas prices can be directly associated to several factors, which include supply and demand, market speculation, taxes and the expense of refining crude oil into gasoline (Herbert, 2008). These factors affect the price of oil and gas in independent ways, but also are related. Supply and demand has a direct affect on the price of crude oil and when supply is high, usually the price of oil decreases. When supply is low, the price of oil increases. In terms of demand for example, an oil price increase is seen as reducing aggregate demand because of a reduction in spending on goods and services (Olatubi & No, 2003). In terms of supply, this increase will likely produce even more widespread effects and oil price increases will cause overall production costs to rise, shifting the aggregate supply curve to the left (Olatubi & No, 2003). According to research, growing economies globally have increased the demand for crude oil while the supply has remained fairly constant. According to the Associated Press (2013), the average price for regular unleaded gasoline, which is $3.25 per gallon, is the lowest since December 26, 2012. In September 2013, AAA Mid-Atlantic said that the average price of a gallon of regular gas in the D.C. metro area was $3.55, compared to $3.56 the prior week (AP, 2013). Market speculators play a role because oil is a product to them that can be bought and sold based on instability of prices. Speculators try to forecast world events that could impact supply and demand. They buy contracts for oil to protect themselves from sudden increases in the price of oil and when prices rise, they can then sell their contracts that were purchased at a cheaper price for a significant profit (Herbert, 2008). Taxes also effect the variances in prices around the country. Refining oil to gas and transporting it to the marketplace also has a significant impact on the price of gas. A portion of the cost of gasoline goes to turning crude oil into fuel, moving it to gas stations, and retail markup.
Gas has many effects in our society, and some of these effects have a negative impact in our life. Our daily lives depend on gas, when we go to work, school and going out. We use gas for electricity, cars and many other things. The effects of gas are direct and very affecting in our lives because of the many forms it can be used in. There are many negative effects of rising gas cutting back in vacation time, prices of everything is going up “inflation”, car companies making more efficient cars.