Do Demand and Supply Shocks Explain USA's Oil Stock Fluctuations?

Applied Energy, Volume 88, pp. 2908-2915, 2011

Posted: 2 Jun 2012

See all articles by Paresh Kumar Narayan

Paresh Kumar Narayan

Deakin University - School of Accounting, Economics and Finance

Aziz Hayat

Deakin University - School of Accounting, Economics and Finance

Date Written: January 13, 2011

Abstract

In this paper using historical monthly data on the US oil stocks (Crude Oil and Petroleum Products Ending Stock-coppes), industrial production, energy use for transportation, oil production, and oil imports, we examine whether supply and demand shocks explain the apparent decline in the volatility of the growth of COPPES since about the mid-1980s. We find that nearly 70% of the variation in the US COPPES growth is explained by its supply and demand factors, each sharing about half of this variation. This is on account of sharp decline in the contribution of persistence to the US COPPES growth variation from about 47% in the pre-break period to about 17% in the post-break period. This reduction is taken up by increased contribution of demand and supply factors since mid 1980s, of which growth variances have declined on net since then. This in turn contributes to the stability of the US COPPES growth fluctuations.

Keywords: Oil stock, Industrial production, Demand and supply shocks

Suggested Citation

Narayan, Paresh Kumar and Hayat, Aziz, Do Demand and Supply Shocks Explain USA's Oil Stock Fluctuations? (January 13, 2011). Applied Energy, Volume 88, pp. 2908-2915, 2011, Available at SSRN: https://ssrn.com/abstract=2071019

Paresh Kumar Narayan (Contact Author)

Deakin University - School of Accounting, Economics and Finance ( email )

221 Burwood Highway
Burwood, Victoria 3215
Australia

Aziz Hayat

Deakin University - School of Accounting, Economics and Finance ( email )

221 Burwood Highway
Burwood, Victoria 3215
Australia

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