Political Cycles and Oil Prices: Understanding the Geopolitical Oil Supply

33 Pages Posted: 23 Dec 2018 Last revised: 12 Mar 2019

See all articles by Yosef Bonaparte

Yosef Bonaparte

University of Colorado at Denver - Department of Finance

Date Written: December 5, 2018

Abstract

Real oil prices (WTI spot) are lower under Democratic presidencies than Republican presidencies by $4.7 - $9.7 per barrel, the results are statistically significant and robust, including subsamples and accounting for business cycles fluctuations. We find that during Democratic presidencies, the overall supply of energy increases for several possible explanations, including more alternative energy initiatives by Democrats, energy companies discouraging costly alternative clean energies, and the role of lobbying in shaping U.S. energy policy. We also find that oil prices and volatility comove with a president’s life cycle (seniority), and prices are lower during second term presidencies. Altogether, the price of oil is influenced by political cycles and seniority of the president.

Keywords: Oil prices, political cycle, president’s seniority

JEL Classification: G12

Suggested Citation

Bonaparte, Yosef, Political Cycles and Oil Prices: Understanding the Geopolitical Oil Supply (December 5, 2018). Available at SSRN: https://ssrn.com/abstract=3296469 or http://dx.doi.org/10.2139/ssrn.3296469

Yosef Bonaparte (Contact Author)

University of Colorado at Denver - Department of Finance ( email )

United States

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