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The Relationship between Crude Oil and Coal Markets: A New Approach

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  • Narjes Zamani

    (Department of Economics, Keio University, Tokyo, Japan.)

Abstract

The level of substitutability of crude oil and coal in production and consumption may lead to the relationship between them. In this paper, the relationships between crude oil market and coal market are investigated, using a structural vector autoregressive model (SVAR). We apply the Kilian (2009) index to distinguish between the effects of oil market demand shocks and global aggregate demand shocks. The empirical results suggest that coal prices are affected by the supply and demand shocks of the oil market, while oil supply shocks have no effect on oil prices. This shows a high level of interaction between the crude oil market and the coal market, arising mainly due to the role of substitution. The effect of global aggregate demand on the price of coal is higher than the effect on the price of oil. Meanwhile, the fear of future oil supply affects the coal market only temporarily.

Suggested Citation

  • Narjes Zamani, 2016. "The Relationship between Crude Oil and Coal Markets: A New Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 6(4), pages 801-805.
    • Handle: RePEc:eco:journ2:2016-04-17
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    References listed on IDEAS

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    Citations

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    Cited by:

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    3. Ślusarczyk, Beata & Chłąd, Mateusz & Michałek, Janusz & Dacko-Pikiewicz, Zdzisława & Androniceanu, Armenia, 2023. "Strategies for supplying enterprises with energy in the context of changing coal prices on the Polish market - The effect of the war in Ukraine," Resources Policy, Elsevier, vol. 85(PB).
    4. Su, Chi-Wei & Yuan, Xi & Umar, Muhammad & Chang, Tsangyao, 2022. "Dynamic price linkage of energies in transformation: Evidence from quantile connectedness," Resources Policy, Elsevier, vol. 78(C).
    5. Sibande, Xolani & Demirer, Riza & Balcilar, Mehmet & Gupta, Rangan, 2023. "On the pricing effects of bitcoin mining in the fossil fuel market: The case of coal," Resources Policy, Elsevier, vol. 85(PB).
    6. Raymond Li & David C. Broadstock, 2021. "Coal Pricing in China: Is It a Bit Too Crude?," Energies, MDPI, vol. 14(13), pages 1-13, June.
    7. Li, Zheng-Zheng & Su, Chi-Wei & Chang, Tsangyao & Lobonţ, Oana-Ramona, 2022. "Policy-driven or market-driven? Evidence from steam coal price bubbles in China," Resources Policy, Elsevier, vol. 78(C).
    8. Khan, Khalid & Su, Chi-Wei & Rehman, Ashfaq U., 2021. "Do multiple bubbles exist in coal price?," Resources Policy, Elsevier, vol. 73(C).
    9. Jerzy Rembeza, 2020. "Coal Prices in Poland: Is the Domestic Market Separated from the International Market?," International Journal of Energy Economics and Policy, Econjournals, vol. 10(4), pages 405-410.
    10. Ding, Lili & Zhao, Zhongchao & Han, Meng, 2021. "Probability density forecasts for steam coal prices in China: The role of high-frequency factors," Energy, Elsevier, vol. 220(C).
    11. Krzysztof Drachal, 2022. "Forecasting the Crude Oil Spot Price with Bayesian Symbolic Regression," Energies, MDPI, vol. 16(1), pages 1-29, December.
    12. Tri Wahyu Adi, 2022. "The International Gas and Crude Oil Price Variability Effect on Indonesian Coal Mining Companies Listed at IDX," International Journal of Energy Economics and Policy, Econjournals, vol. 12(5), pages 1-10, September.

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    More about this item

    Keywords

    Crude Oil Price; Coal Price; Oil Supply Shock;
    All these keywords.

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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