Renewables keep oil prices high now but the plan flips that through rapid development – best studies

This empirical analysis provides significant insights into the short-term and long-term relationship between WTI oil prices and various factors, including U.S. crude oil production, global oil prices, natural gas prices, renewable energy production, and clean energy company returns. Our findings suggest that renewable energy production currently complements crude oil production, rather than substituting it, with an increase in renewable energy production associated with increased oil prices when crude oil production remains constant. Our model is represented by stochastic variables in nature, but there is a long-term equilibrium towards which the considered set of variables converges over time. The deviation from the equilibrium trajectory is corrected very quickly because the speed of adjustment is very high.

Currently, various policies and investment efforts are being applied to stimulate the production of energy from renewable energy sources, and as a result, an increase in energy consumption from renewable energy sources is expected. Since renewable energy technologies are expensive and these products are expensive, they keep oil prices high.

It is known that there is a fairly clear trend in the world for increasing energy from renewable energy sources. However, the cheapening of such energy is possible only due to the technological component, which in turn is possible during the period of economic growth. On the other hand, in the presence of economic growth, energy consumption increases, which in turn increases the price of oil and, as a consequence, energy from renewable energy sources. However, the behavior of this trend is changeable in the current realities of the expectation of a recession, when a decrease in consumption is possible, and as a result, a decrease in the price of oil. Such multidirectional behavior in the energy market can negatively affect the competitiveness of renewable energy during the economic downturn.