Volatility Pricing of Crude Oil and Its Respondent Factor
THE VOLATILITY PRICE OF CRUDE OIL AND ITS RESPONDENT FACTOR
Dr. R. Thenmozhi *, Trinley Paldon **
*Associate Professor, Dept of Management Studies, University of Madras, Chennai. Email:thendeivam@yahoo.com
** Research Scholar, Dept of Management Studies, University of Madras, Chennai. Email: trinley21@yahoo.co.in
Abstract
The pricing of crude oil in domestic monetary policy has always been efficacious in controlling or keeps in touch with the inflation. The immediate effects of inflation sparse on fuel and other convenient products in relation thereby disrupting monetary policy and often need for change to curb the effects. This present paper refers with world energy consumption for 2011 and India’s historical crude oil consumption. Volatility is measured by employing monthly standard deviation from 2007 to July 2012 and integrating crude oil, CPI to estimate the level of oil price.
A study is proposed based on the secondary data. The outcomes of the analysis reveal that oil prices have a significant impact on both economic growth and inflation, when it is measured in local currencies.
INTRODUCTION
Since the industrial revolution, the worlds’ appetite for energy from crude oil is at an escalating rate. The rise in prices of oil in the years is a worrying matter and contributed to the volatility of economics and proved its effects by disrupting the energy markets and jolting the responding factors hence a change in respondent is felt needed.
Oil is a vital input in the production process of an economy from energy generation to manufacturing process and transporting the output to the market. Therefore volatility in oil prices disrupts the process of the economy from the dealers to the end users. Although industrialized developed countries seem to be more dependent on oil, evidence shows that the demand for oil in developing countries is on an increasing trend (Birol, 2007)-
As oil is directly linked to the production process, it can have a
Dr. R. Thenmozhi *, Trinley Paldon **
*Associate Professor, Dept of Management Studies, University of Madras, Chennai. Email:thendeivam@yahoo.com
** Research Scholar, Dept of Management Studies, University of Madras, Chennai. Email: trinley21@yahoo.co.in
Abstract
The pricing of crude oil in domestic monetary policy has always been efficacious in controlling or keeps in touch with the inflation. The immediate effects of inflation sparse on fuel and other convenient products in relation thereby disrupting monetary policy and often need for change to curb the effects. This present paper refers with world energy consumption for 2011 and India’s historical crude oil consumption. Volatility is measured by employing monthly standard deviation from 2007 to July 2012 and integrating crude oil, CPI to estimate the level of oil price.
A study is proposed based on the secondary data. The outcomes of the analysis reveal that oil prices have a significant impact on both economic growth and inflation, when it is measured in local currencies.
INTRODUCTION
Since the industrial revolution, the worlds’ appetite for energy from crude oil is at an escalating rate. The rise in prices of oil in the years is a worrying matter and contributed to the volatility of economics and proved its effects by disrupting the energy markets and jolting the responding factors hence a change in respondent is felt needed.
Oil is a vital input in the production process of an economy from energy generation to manufacturing process and transporting the output to the market. Therefore volatility in oil prices disrupts the process of the economy from the dealers to the end users. Although industrialized developed countries seem to be more dependent on oil, evidence shows that the demand for oil in developing countries is on an increasing trend (Birol, 2007)-
As oil is directly linked to the production process, it can have a
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