# Oil Price and Energy Depletion Nexus in GCC Countries: Asymmetry Analyses

^{1}

^{2}

^{*}

## Abstract

**:**

## 1. Introduction

## 2. Methods

_{it}is the natural log of energy depletion, which is defined as the value of energy resources divided by reserve lifetime [74]. OP

_{it}is the natural log of Organization of the Petroleum Exporting Countries (OPEC) Basket oil price US $ per barrel. The OPP

_{t}and OPN

_{t}are the partial sum of positive and negative changes in OP

_{t}, respectively. The OPP

_{t}and OPN

_{t}are calculated using Shin et al.’s [73] methodology. i indicates the six GCC countries and t is the maximum available annual time period of 1970–2017. Data on energy depletion are sourced from the World Bank [74] and oil price is sourced from the Government of Saudi Arabia [75]. Equation (1) is targeted to estimate as a panel of six GCC countries altogether to determine the overall impact of OP on energy depletion of the GCC region. Further, Equation (1) is regressed separately for each country to determine the individual impact of OP on the energy depletion of each country separately. Following Shin et al. [73], the time series OP

_{t}is converted into OPP

_{t}and OPN

_{t}as follows:

_{t}and OPN

_{t}are the partial sum of positive and negative changes in OP

_{t}. After defining the variables, we apply the Dickey–Fuller generalized least square (DF-GLS) of Elliott et al. [76] to test the unit root problem in the following way:

_{0}) of the non-stationary. After that, we apply the autoregressive distributed lag (ARDL) of Pesaran et al. [77] on Equation (1):

_{0}, ${\beta}_{1}={\beta}_{2}={\beta}_{3}=0$, can be tested on Equation (5), and its rejection can corroborate the cointegration. The negative ${\lambda}_{1}$ from Equation (6) can corroborate the short-run relationship. Then, long-run impacts from Equation (5) and short-run effects from Equation (6) can be estimated. After time series’ analyses, we test the impact of OP on the energy depletion of the whole panel of the GCC region. At first, we test the Fisher-Augmented Dickey and Fuller (ADF) test based on Dickey and Fuller [78] and the Fisher-Phillips and Perron (PP) test based on Phillips and Perron [79] to verify the stationarity in the panel series. ADF and PP equations are as follows:

_{0}: Non-stationary series, as per the methodology of Maddala and Wu [80]. After the panel unit root, we apply the Kao [81] panel cointegration as follows:

## 3. Results and Discussions

_{t}and OPN

_{t}variables are the same for all the GCC countries; thus, it is tested once. However, the energy depletion variable is different for each GCC country, so it is tested separately for each country. The results show that all series are nonstationary at the level and stationary at the first difference.

_{t−1}[77], reported in Table 3. Hence, we may claim cointegration in all the estimated models of GCC countries. The p-values from diagnostic tests are more than 0.1. Hence, models are econometrically reliable.

_{0}of symmetry. The estimated chi-square (p-value) is 4.8754 (0.0272), 103.0008 (0.0000), and 3.3028 (0.0768) for Bahrain, Kuwait, and Saudi Arabia, respectively, and H

_{0}is rejected. Hence, the increasing and decreasing OP have an asymmetrical impact on the depletion in Bahrain, Kuwait, and Saudi Arabia. The signs of the coefficient are the same in these countries, but the magnitude of effects is different. The impact of the increasing OP is more than the impact of decreasing OP in Bahrain and Saudi Arabia. However, the coefficient of decreasing OP is more than the coefficient of increasing OP in Kuwait. The estimated chi-square (p-value) is 1.1055 (0.2992), 0.6407 (0.4234), and 0.8798 (0.3483) for Oman, Qatar, and UAE, respectively, and the symmetry is proven for these countries.

_{t−1}corroborated the short-run relationships in the models of all investigated countries. The increasing OP has a positive effect on energy depletion in all the GCC countries except Saudi Arabia. Moreover, the price elasticity estimate is found to be unity for Oman and less than one for the rest of the countries. The decreasing OP has a positive effect on energy depletion in Bahrain and Oman and has insignificant effects on the rest of countries. The asymmetric relationship of OP and energy depletion is claimed in all countries except Bahrain and Oman due to the insignificance of any one of the effects. We apply the Wald test, and the estimated chi-square (p-value) is 2.6572 (0.1111) and 7.7008 (0.0055) for Bahrain and Oman, respectively. Hence, the relationship between OP and energy depletion is established to be symmetric in the case of Bahrain and asymmetric in the case of Oman.

_{it}and OPN

_{it}. The estimated chi-square (p-value) is 0.2142 (0.8917), 12.4757 (0.0004), and 9.4115 (0.0022) in the estimations of PMG, FMOLS, and DOLS, respectively. Hence, the symmetry is corroborated in the PMG estimates, and asymmetry is proved in the estimates of FMOLS and DOLS. Mixed evidence of symmetry and asymmetry is found in the investigated relationship. First, this may be due to aggregation biasness in the panel estimates. Further, we may conclude the asymmetry in the panel results due to the reason that we find more evidence of asymmetry in the time series analyses as well.

## 4. Conclusions

## Author Contributions

## Funding

## Conflicts of Interest

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Country | Variable | Level | First Difference | ||
---|---|---|---|---|---|

C | C&T | C | C&T | ||

OPP_{t} | 1.5881 | −2.2943 | −5.9912 *** | −6.1374 *** | |

OPN_{t} | 1.6424 | −2.1039 | −6.4121 *** | −6.9314 *** | |

Bahrain | ED_{t} | −0.4921 | −2.0082 | −6.0819 *** | −6.5073 *** |

Kuwait | ED_{t} | −1.9041 | −2.1113 | −6.8547 *** | −7.0361 *** |

Oman | ED_{t} | −0.2908 | −1.9754 | −6.4624 *** | −6.7418 *** |

Qatar | ED_{t} | −0.4078 | −2.0516 | −5.1997 *** | −5.9810 *** |

Saudi Arabia | ED_{t} | −0.6621 | −1.9924 | −4.5343 *** | −5.6171 *** |

UAE | ED_{t} | −0.6283 | −1.9883 | −4.8613 *** | −6.4529 *** |

Country | Bound Test | Heteroscedasticity | Serial Correlation | Normality | Functional Form |
---|---|---|---|---|---|

Bahrain | 3.5339 * | 0.5566 (0.7619) | 0.9614 (0.3917) | 0.3574 (0.8451) | 1.7438 (0.2057) |

Kuwait | 3.6219 * | 1.1107 (0.3642) | 1.3317 (0.2755) | 2.1654 (0.3248) | 2.2774 (0.1663) |

Oman | 1.5682 | 1.8654 (0.1216) | 0.1236 (0.8840) | 4.0008 (0.1353) | 2.7680 (0.1040) |

Qatar | 3.7085 * | 0.7481 (0.5922) | 0.4999 (0.6104) | 4.2883 (0.1171) | 1.1245 (0.2541) |

Saudi Arabia | 5.2384 *** | 1.2559 (0.3000) | 0.5551 (0.5787) | 4.2142 (0.1245) | 0.7480 (0.3925) |

UAE | 5.0102 *** | 0.9346 (0.4688) | 0.1144 (0.8922) | 3.2487 (0.2514) | 2.5912 (0.1153) |

Variable | Bahrain | Kuwait | Oman | Qatar | Saudi Arabia | UAE |
---|---|---|---|---|---|---|

Long run | ||||||

OPP_{t} | 1.0991 (0.0000) | 0.1570 (0.0809) | 1.0295 (0.0000) | 1.1943 (0.0000) | 1.3520 (0.0000) | 1.3173 (0.0000) |

OPN_{t} | 0.7842 (0.0000) | 1.8206 (0.0000) | 0.9209 (0.0000) | 0.9635 (0.0000) | 0.6800 (0.0163) | 1.0676 (0.0000) |

Intercept | 17.0646 (0.0000) | 20.2305 (0.0000) | 18.8757 (0.0000) | 19.1931 (0.0000) | 22.1977 (0.0000) | 20.0115 (0.0000) |

Short-run | ||||||

ΔOPP_{t} | 0.9062 (0.0000) | 0.4104 (0.0599) | 1.0222 (0.0000) | 0.6893 (0.0302) | 0.1898 (0.7616) | 0.6857 (0.0085) |

ΔOPN_{t} | 0.6985 (0.0003) | −0.2698 (0.2984) | 0.6797 (0.0652) | 0.1361 (0.8103) | −0.4759 (0.6647) | 0.4216 (0.2805) |

ΔOPN_{t−1} | 0.2718 (0.0083) | - | - | - | 0.5267 (0.0082) | - |

ECT_{t−1} | −0.3368 (0.0003) | −0.3825 (0.0000) | −0.2051 (0.0934) | −0.2187 (0.0156) | −0.1939 (0.0656) | −0.2476 (0.0077) |

Test | Variable | Level | First Difference | ||||
---|---|---|---|---|---|---|---|

C | C&T | None | C | C&T | None | ||

Fisher-ADF | ED_{it} | −1.8103 | −0.3832 | 0.8270 | −10.9912 *** | −10.0893 *** | −13.3883 *** |

OPP_{it} | −0.1280 | −1.9416 | 0.1362 | −10.6775 *** | −9.6579 *** | −9.7320 *** | |

OPP_{it} | 0.0774 | −0.9179 | 0.5489 | −11.7288 *** | −11.0525 *** | −12.1800 *** | |

Fisher-PP | ED_{it} | −1.3201 | −0.9754 | 0.4630 | −11.3396 *** | −14.4436 *** | −16.2614 *** |

OPP_{it} | −0.3592 | −1.8327 | 0.0282 | −10.6120 *** | −9.5697 *** | −9.6100 *** | |

OPP_{it} | 0.2933 | −0.8541 | 0.7549 | −11.7283 *** | −11.0563 *** | −12.3660 *** |

Pedroni Cointegration Test | ||||
---|---|---|---|---|

Within-Dimension | ||||

Test | Statistic | Prob. | Statistic | Prob. |

Panel v-Statistic | −0.2658 | 0.6048 | −0.4862 | 0.6866 |

Panel rho-Statistic | −1.7792 | 0.0376 | −1.4017 | 0.0805 |

Panel PP-Statistic | −2.0709 | 0.0192 | −1.6597 | 0.0485 |

Panel ADF-Statistic | −1.8150 | 0.0348 | −1.8270 | 0.0338 |

Between-Dimension | ||||

Group rho-Statistic | −0.1514 | 0.4398 | - | - |

Group PP-Statistic | −0.9534 | 0.1702 | - | - |

Group ADF-Statistic | −0.6862 | 0.2463 | - | − |

Kao Cointegration Test | ||||

Test | Statistic | Prob. | - | - |

ADF | −5.0409 | 0.0000 | - | - |

Fisher–Johansen Panel Cointegration Test | ||||

Hypothesized No. of CE(s) | Trace Test | Prob. | Max-Eigen Test | Prob. |

None | 27.13 | 0.0074 | 27.30 | 0.0070 |

At most 1 | 10.48 | 0.5743 | 12.71 | 0.3908 |

At most 2 | 2.094 | 0.9992 | 2.094 | 0.9992 |

Variable | PMG | FMOLS | DOLS |
---|---|---|---|

OPP_{it} | 1.1364 (0.0000) | 1.0341 (0.0000) | 1.0457 (0.0000) |

OPN_{it} | 1.1114 (0.0000) | 0.8163 (0.0000) | 0.8267 (0.0000) |

© 2020 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (http://creativecommons.org/licenses/by/4.0/).

## Share and Cite

**MDPI and ACS Style**

Alkhateeb, T.T.Y.; Mahmood, H.
Oil Price and Energy Depletion Nexus in GCC Countries: Asymmetry Analyses. *Energies* **2020**, *13*, 3058.
https://doi.org/10.3390/en13123058

**AMA Style**

Alkhateeb TTY, Mahmood H.
Oil Price and Energy Depletion Nexus in GCC Countries: Asymmetry Analyses. *Energies*. 2020; 13(12):3058.
https://doi.org/10.3390/en13123058

**Chicago/Turabian Style**

Alkhateeb, Tarek Tawfik Yousef, and Haider Mahmood.
2020. "Oil Price and Energy Depletion Nexus in GCC Countries: Asymmetry Analyses" *Energies* 13, no. 12: 3058.
https://doi.org/10.3390/en13123058