The Effect of Fossil Fuels Price on Energy’s Stock Returns

Authors

  • Nurul Syahira Che Roihan
  • Noor 'Adilah Ibrahim Universiti Sains Islam Malaysia

DOI:

https://doi.org/10.33102/mjosht.v7i2.165

Keywords:

Crude oil, fuel oil, diesel, gas, energy’s stock return.

Abstract

Fossil fuels play an important role in energy systems as well as in the growth of technical, cultural and economic conditions of a country. In this study, we aim to investigate the effect of fossil fuels price towards energy’s stock returns in Malaysia by using monthly fossil fuels price and energy stock price taken from Malaysian Energy Commission and investing.com, respectively. To investigate their relationship, first we test the stationarity using Augmented Dickey Fuller Test (ADF). The result shows that the data are stationary at first differences. Next, we use Pearson correlation to measure the strength of the association between two variables. To observe the effect of fossil fuels prices on energy’s stock returns, we conduct a Multiple Linear Regression. We discovered that their relationships are not statistically significant. This is highly due to the competition of the use of non-renewable and renewable energy in recent years. The energy producers are adopting the renewable energy into the electricity grid which indirectly affect the utilization of fossil fuels as well as its price.

Downloads

Download data is not yet available.

References

Olivier, J. G. J. , Schure, K. M., and Peters, J. (2017). Trends in global CO2 and total greenhouse gas 2017 Report. PBL Netherlands Environmental Assessment Agency, (December), 5. https://doi.org/https://www.pbl.nl/sites/default/files/cms/publicaties/pbl-2017-trends-in-global-co2-and-total-greenhouse-gas-emissons-2017-report_2674.pdf

Jafarian, A. and Safari, M. (2015a). Impact of Oil Price Fluctuations on Returns of Different Sectors of Malaysian Stock Market. Journal of Modern Accounting and Auditing, 11(3), 159–167. https://doi.org/10.17265/1548-6583/2015.03.005

Sun, C., Ding, D., Fang, X., Zhang, H., and Li, J. (2019a). How do fossil energy prices affect the stock prices of new energy companies? Evidence from Divisia energy price index in China’s market. Energy, (December 2018), 637–645. https://doi.org/10.1016/j.energy.2018.12.032

Lee, D., & Baek, J. (2018). Stock prices of renewable energy firms: Are there asymmetric responses to oil price changes? Economies, 6(4), 2–9. https://doi.org/10.3390/economies6040059

Kyritsis, E., & Serletis, A. (2017). Oil Prices and the Renewable Energy Sector. SSRN Electronic Journal, (January 2017). https://doi.org/10.2139/ssrn.3070998

Gormus, N. A., Soytas, U., & Diltz, J. D. (2015). Oil Prices, Fossil-Fuel Stocks and Alternative Energy Stocks. International Journal of Economics and Finance, 7(7). https://doi.org/10.5539/ijef.v7n7p43

Jafarian, A. and Safari, M. (2015b). Impact of Oil Price Fluctuations on Returns of Different Sectors of Malaysian Stock Market. Journal of Modern Accounting and Auditing, 11(3). https://doi.org/10.17265/1548-6583/2015.03.005

Anyalechi, K. C., Ezeaku, H. C., Onwumere, J. U. J., & Okereke, E. J. (2019). Does oil price fluctuation affect stock market returns in Nigeria? International Journal of Energy Economics and Policy, 9(1), 194–199. https://doi.org/10.32479/ijeep.7145

John, T. T. & Varghese, C. M. (2019). Crude oil fluctuations in the Indian clean energy market. IJBAR, 6(1), 115-122.

Karacan, R., Mukhtarov, S., Baris, I., Isleyen, A. & Yardimci, M. E. (2021). The impact of oil price on transition toward renewable energy consumption? Evidence from Russia. Energies, 14, 2947. Modern Accounting and Auditing, 11(3). https://doi.org/10.17265/1548-6583/2015.03.005

Zhao, X. (2020). Do the stock returns of clean energy corporations respond to oil price shocks and policy uncertainty? Journal of Economic Structures, 9(1), pp. 1-16.

Alamgir, F., & Amin, S. B. (2021). The nexus between oil price and stock market: Evidence from South Asia. Energy Reports, 7, pp. 693-703.

Kyritsis, E., & Serletis, A. (2019). Oil prices and the renewable energy sector. The Energy Journal, 40.

Bani, Y., & Ramli, S. N. (2019). Does Oil Price Matter for the Malaysian Stock Market?. International Journal of Economics, Management and Accounting, 27(2), pp. 315-329.

Echchabi, A., & Azouzi, D. (2017). Oil price fluctuations and stock market movements: An application in Oman. The Journal of Asian Finance, Economics, and Business, 4(2), pp. 19-23.

Downloads

Published

2021-10-01

How to Cite

Che Roihan, N. S. ., & Ibrahim, N. 'Adilah. (2021). The Effect of Fossil Fuels Price on Energy’s Stock Returns. Malaysian Journal of Science Health & Technology, 7(2), 48–53. https://doi.org/10.33102/mjosht.v7i2.165

Issue

Section

Financial Mathematics

Similar Articles

<< < 1 2 3 > >> 

You may also start an advanced similarity search for this article.