Asymmetric oil shocks and external balances of major oil exporting and importing countries

This study investigates the effects of oil price shocks on three measures of oil exporters' and oil importers' external balances: total trade balance, oil trade balance and non-oil trade balance. We employ three second-generation heterogeneous linear panel models and one recently developed non-linear panel estimation technique that allows for cross-sectional dependence. With respect to 28 major oil exporting countries, an increase in oil prices leads to an improved real oil trade balance, although it is detrimental to non-oil and total trade balances. This finding might be due to the expenditure effect arising from increases in proceeds from oil exports. A decrease in oil prices is found to be beneficial for both total and oil trade balances in these oil exporting countries. Forty major oil importers seem to be increasingly shielded from positive oil shocks over the 1970s and 1980s; however, they must worry about oil price declines. A decline in oil prices has a negative impact on both total and real oil trade balances resulting from increased oil imports in emerging economies. Hence, a decline in oil prices is beneficial to oil exporters due to the quantity effect outweighing the price effect, while for oil importers a stable oil price is more desirable than a price decline. These results are important to take into account if we are to gain a full understanding on the magnitude of the trade and macroeconomic effects of oil price changes and what the policy responses should be.

Political limits on the world oil trade : firm-level evidence from US firms

International politics affect trade patterns, especially for firms in extractive industries. We construct the firm-level dataset for the U.S. oil-importing companies over 1986-2010 to test whether the state of international relations with the trading partners of the U.S. affect importing behavior of the U.S. firms. To measure "political distance" between the U.S. and her trading partners we use voting records for the UN General Assembly. We find that the U.S. firms, in fact, import significantly less oil from the political opponents of the U.S. Our conjecture is that the decrease in oil imports is mainly driven by large, vertically-integrated U.S. firms that engage in foreign direct investment (FDI) overseas.

Why do oil importers diversify their import sources politically? : evidence from U.S. firm-level data

International politics affects oil trade. But why? We construct a firm-level dataset for all U.S. oil-importing companies over 1986-2008 to examine what kinds of firms are more responsive to change in "political distance" between the U.S. and her trading partners, measured by divergence in their UN General Assembly voting patterns. Consistent with previous macro evidence, we first show that individual firms diversify their oil imports politically, even after controlling for unobserved firm heterogeneity. We conjecture that the political pattern of oil imports from these individual firms is driven by hold-up risks, because oil trade is often associated with backward vertical FDI. To test this hold-up risk hypothesis, we investigate heterogeneity in responses by matching transaction-level import data with firm-level worldwide reserves. Our results show that long-run oil import decisions are indeed more elastic for firms with oil reserves overseas than those without, although the reverse is true in the short run. We interpret this empirical regularity as that while firms trade in the spot market can adjust their imports immediately, vertically-integrated firms with investment overseas tend to commit to term contracts in the short run even though they are more responsive to changes in international politics in the long run.

The effects of international politics on oil-exporting developing countries

International politics affects oil trade. But does it affect the oil-exporting developing countries more? We construct a firm-level dataset for all U.S. oil-importing companies over 1986-2008 to examine how these firms respond to changes in "political distance" between the U.S. and her trading partners, measured by divergence in their UN General Assembly voting patterns. Consistent with previous macro evidence, we first show that individual firms diversify their oil imports politically, even after controlling for unobserved firm heterogeneity. We conjecture that the political pattern of oil imports from these individual firms is driven by hold-up risks, because oil trade is often associated with backward vertical FDI. To the extent that developing countries have higher hold-up risks because of their weaker institutions, the political effect on oil trade should be more significant in the developing world. We find that oil import decisions are indeed more elastic when firms import from developing countries, although the reverse is true in the short run. Our results suggest that international politics can affect oil revenue and hence long-term development in the developing world.

Political influence in commercial and financial oil trading : the evidence from US firms

International politics affects oil trade. But do financial and commercial traders who participate in spot oil trading also respond to changes in international politics? We construct a firm-level dataset for all U.S. oil-importing companies over 1986-2008 to examine how these firms respond to increases in "political distance" between the U.S. and her trading partners, measured by divergence in their UN General Assembly voting patterns. Consistent with previous macro evidence, we first show that individual firms diversify their oil imports politically, even after controlling for unobserved firm heterogeneity. However, the political pattern of oil imports is not entirely driven by the concerns of hold-up risks, which exist when oil transactions via term contracts are associated with backward vertical FDI that is subject to expropriation. In particular, our results indicate that even financial and commercial traders significantly reduce their oil imports from U.S. political enemies. Interestingly, while these traders diversify their oil imports politically immediately after changes in international politics, other oil companies reduce their oil imports with a significant time lag. Our findings suggest that in designing regulations to avoid harmful repercussions on commodity and financial assets, policymakers need to understand the nature of political risk.

Cold-Start Emissions testing of Snowmobiles Using Ethanol and Gasoline

Increasing prices for fuel with depletion and instability in foreign oil imports has driven the importance for using alternative and renewable fuels. The alternative fuels such as ethanol, methanol, butyl alcohol, and natural gas are of interest to be used to relieve some of the dependence on oil for transportation. The renewable fuel, ethanol which is made from the sugars of corn, has been used widely in fuel for vehicles in the United States because of its unique qualities. As with any renewable fuel, ethanol has many advantages but also has disadvantages. Cold startability of engines is one area of concern when using ethanol blended fuel. This research was focused on the cold startability of snowmobiles at ambient temperatures of 20 °F, 0 °F, and -20 °F. The tests were performed in a modified 48 foot refrigerated trailer which was retrofitted for the purpose of cold-start tests. Pure gasoline (E0) was used as a baseline test. A splash blended ethanol and gasoline mixture (E15, 15% ethanol and 85% gasoline by volume) was then tested and compared to the E0 fuel. Four different types of snowmobiles were used for the testing including a Yamaha FX Nytro RTX four-stroke, Ski-doo MX Z TNT 600 E-TEC direct injected two stroke, Polaris 800 Rush semi-direct injected two-stroke, and an Arctic Cat F570 carbureted two-stroke. All of the snowmobiles operate on open loop systems which means there was no compensation for the change in fuel properties. Emissions were sampled using a Sensors Inc. Semtech DS five gas emissions analyzer and engine data was recoded using AIM Racing Data Power EVO3 Pro and EVO4 systems. The recorded raw exhaust emissions included carbon monoxide (CO), carbon dioxide (CO2), total hydrocarbons (THC), and oxygen (O2). To help explain the trends in the emissions data, engine parameters were also recorded. The EVO equipment was installed on each vehicle to record the following parameters: engine speed, exhaust gas temperature, head temperature, coolant temperature, and test cell air temperature. At least three consistent tests to ensure repeatability were taken at each fuel and temperature combination so a total of 18 valid tests were taken on each snowmobile. The snowmobiles were run at operating temperature to clear any excess fuel in the engine crankcase before each cold-start test. The trends from switching from E0 to E15 were different for each snowmobile as they all employ different engine technologies. The Yamaha snowmobile (four-stroke EFI) achieved higher levels of CO2 with lower CO and THC emissions on E15. Engine speeds were fairly consistent between fuels but the average engine speeds were increased as the temperatures decreased. The average exhaust gas temperature increased from 1.3-1.8% for the E15 compared to E0 due to enleanment. For the Ski-doo snowmobile (direct injected two-stroke) only slight differences were noted when switching from E0 to E15. This could possibly be due to the lean of stoichiometric operation of the engine at idle. The CO2 emissions decreased slightly at 20 °F and 0 °F for E15 fuel with a small difference at -20 °F. Almost no change in CO or THC emissions was noted for all temperatures. The only significant difference in the engine data observed was the exhaust gas temperature which decreased with E15. The Polaris snowmobile (semi-direct injected two-stroke) had similar raw exhaust emissions for each of the two fuels. This was probably due to changing a resistor when using E15 which changed the fuel map for an ethanol mixture (E10 vs. E0). This snowmobile operates at a rich condition which caused the engine to emit higher values of CO than CO2 along with exceeding the THC analyzer range at idle. The engine parameters and emissions did not increase or decrease significantly with decreasing temperature. The average idle engine speed did increase as the ambient temperature decreased. The Arctic Cat snowmobile (carbureted two-stroke) was equipped with a choke lever to assist cold-starts. The choke was operated in the same manor for both fuels. Lower levels of CO emissions with E15 fuel were observed yet the THC emissions exceeded the analyzer range. The engine had a slightly lower speed with E15.

Impacts of the EU Biofuel Target on Agricultural Markets and Land Use - A Comparative Modelling Assessment

The Renewable Energy Directive (2009/28/EC) requires that 20% of the EU's energy needs should come from renewable sources by 2020, and includes a target for the transport sector of 10% from biofuels. This report analyses and discusses the global impacts of this biofuel target on agricultural production, markets and land use, as simulated by three agricultural sector models, AGLINK-COSIMO, ESIM and CAPRI. The impacts identified include higher EU production of ethanol and biodiesel, and of the crops used to produce them, as well as more imports of both biofuels. Trade flows of biofuel feedstocks also change to reflect greater EU demand, including a significant increase in vegetable oil imports. However, as the extra demand is small in world market terms, the impact on world market prices is limited. With the EU biofuel target, global use of land for crop cultivation is higher by 5.2 million hectares. About one quarter is area within the EU, some of which would otherwise have left agriculture.

Promises and hurdles in EU-Kazakhstan energy cooperation. EUCAM Commentary No. 20, November 2011

Kazakhstan’s Prime Minister, Karim Massimov, once referred to energy cooperation as the ‘core’ of relations between his country and the European Union (EU). Indeed, there is great mutual interest in this area. Six percent of the EU’s crude oil imports and 16 percent of its uranium imports come from Kazakhstan. And around 80 percent of the latter’s oil exports go towards Europe. For Kazakhstani producers, access to European lucrative and reliable markets is of utmost importance. Over the last several years, the thrust of Kazakhstan’s foreign policy was aimed at increasing the capacity of the Caspian Pipeline Consortium (CPC) that pumps Kazakhstani oil to Europe. Moreover, Kazmunaigaz’s (KMG) – the national oil and gas company – major external investment was in the Romanian oil company Rompetrol.