The oil and energy consumption volatility

Abstract

This study attempted to analyze the univariate time series of Oil and Energy Consumption Volatility. The study's primary goal is to examine the consumption trend and degree of volatility from 1970 to 2021 in the Philippines. Therefore, the purpose of this study was to present the trend of consumption volatility changes of oil and energy, to assess the consumption volatility of oil and energy, to determine the peak and low of consumption in time series, and to determine the relationship between the oil consumption and energy consumption. The study employed a time series of secondary data obtained from the online database of ‘Our World in Data’ on a yearly basis from 1960 to 2021. Furthermore, the data were statistically treated by employing the Vector Autoregressive (VAR) model to capture the dynamic relationship and the volatility of oil and energy consumption. With this, the impulse response function (IRF) suggests that energy consumption is subject to some degree of volatility when there is an oil consumption shock and the variance decomposition suggests that oil consumption has a significant impact on the volatility of energy consumption in the Philippines, with oil shocks being the primary source of this volatility. Energy consumption also has a significant impact on its own volatility but to a lesser extent than oil consumption.