Effects of energy diversification policy against crude oil price fluctuations

Abstract

The present research analyzes the diversification effect in 15 OECD countries' energy consumption and their import source of crude oil against annual price changes (1984-2010) in crude oil. The study establishes a multivariate panel equation including factors relevant to the price changes (e.g., national economic variables and major socioeconomic events) for econometric estimation of system generalized method of moments. The research finds that a country's two concentration levels of energy utilization (i.e., energy consumption and import dependence for crude oil) have positive effects on the annual price changes in crude oil. The result suggests empirical support for energy diversification policies in other countries.