Oil Price and Energy Depletion Nexus in GCC Countries: Asymmetry Analyses

: Oil price has played a prominent role in oil exporter economies and may also a ﬀ ect energy depletion in oil-dependent countries. Considering asymmetry, the relationship between oil price (OP) and energy depletion has been investigated in the Gulf Cooperation Council (GCC) region from 1970 to 2017. We ﬁnd asymmetrical positive e ﬀ ects of OP on the energy depletion in the panel of the GCC region. To avoid aggregation biasness in the panel estimates, we also conduct a time-series analysis on each GCC country. We ﬁnd a positive impact of increasing OP on the energy depletion in six GCC countries, and this e ﬀ ect is found to be elastic in the case of all countries except for Kuwait. Positive e ﬀ ects of decreasing OP on the depletion are also found in all the GCC countries, and these e ﬀ ects are found to be elastic or unit elastic in the case of all countries except Saudi Arabia. Asymmetry in the relationship of oil price and energy depletion is established for Bahrain, Kuwait, and Saudi Arabia in terms of the di ﬀ erent magnitude of e ﬀ ects.


Introduction
Oil is a primary need of the global economy as a significant energy source for households, industries, and transportation segments. Oil supports macroeconomic performance of oil-dependent countries. Further, oil price (OP) movements affect both oil importer and exporter economies, as increasing oil prices negatively affect the income of the importers by raising the cost of production, and could support the income of oil exporters as well. Mainly, OP changes directly affect the oil-exporting economies because any movement in oil price could have a major effect on the income of oil exporter countries. The literature has corroborated the positive impact of OP on the income and production of the oil-exporting countries and the negative impact on the oil-importing countries [1][2][3][4][5][6][7][8][9][10]. In addition, Saari et al. [11] discussed that rising OP would have an adverse effect on the income distribution of the oil-importing economy.
Moreover, Bodenstein [12] claimed that increasing OP would transfer the wealth from oil importer to exporter economies. Increasing OP could appreciate the currencies of oil exporters. To stabilize the foreign value of currency, traders from oil-importing countries would keep some reserves in the oil exporter countries. In this way, OP may also affect the external balance of exporter and importer countries. A vast literature has probed the impact of OP on the trade and external balance of exporter and importer countries [12][13][14][15][16][17][18][19][20][21][22]. Moreover, the effect of OP has also been investigated on employment and unemployment issues [23][24][25][26][27][28].

Methods
We isolate the impact of OP on the energy depletion in the model of the GCC region. Some literature has corroborated the asymmetric effect of OP on different macroeconomic indicators [2][3][4][5][15][16][17]20,29]. Hence, we are taking into account the possible asymmetric relationship between OP and energy depletion in the following way: ED it is the natural log of energy depletion, which is defined as the value of energy resources divided by reserve lifetime [74]. OP it is the natural log of Organization of the Petroleum Exporting Countries (OPEC) Basket oil price US $ per barrel. The OPP t and OPN t are the partial sum of positive and negative changes in OP t , respectively. The OPP t and OPN t are calculated using Shin et al.'s [73] methodology. i indicates the six GCC countries and t is the maximum available annual time period of 1970-2017. Data on energy depletion are sourced from the World Bank [74] and oil price is sourced from the Government of Saudi Arabia [75]. Equation (1) is targeted to estimate as a panel of six GCC countries altogether to determine the overall impact of OP on energy depletion of the GCC region. Further, Equation (1) is regressed separately for each country to determine the individual impact of OP on the energy depletion of each country separately. Following Shin et al. [73], the time series OP t is converted into OPP t and OPN t as follows: The OPP t and OPN t are the partial sum of positive and negative changes in OP t . After defining the variables, we apply the Dickey-Fuller generalized least square (DF-GLS) of Elliott et al. [76] to test the unit root problem in the following way: Equation (4) follows the de-trending procedure (X d t ) with a null hypothesis (H 0 ) of the non-stationary. After that, we apply the autoregressive distributed lag (ARDL) of Pesaran et al. [77] on Equation (1): The H 0 , β 1 = β 2 = β 3 = 0, can be tested on Equation (5), and its rejection can corroborate the cointegration. The negative λ 1 from Equation (6) can corroborate the short-run relationship. Then, long-run impacts from Equation (5) and short-run effects from Equation (6) can be estimated. After time series' analyses, we test the impact of OP on the energy depletion of the whole panel of the GCC region. At first, we test the Fisher-Augmented Dickey and Fuller (ADF) test based on Dickey and Fuller [78] and the Fisher-Phillips and Perron (PP) test based on Phillips and Perron [79] to verify the stationarity in the panel series. ADF and PP equations are as follows: Equations (7) and (8) show the ADF and PP specification, respectively, which can be applied on the individual time series of each GCC country. Then, estimated probability values from each GCC country's Equations (7) and (8) can be put in Equation (9) to combine the p-value, with H 0 : Non-stationary series, as per the methodology of Maddala and Wu [80]. After the panel unit root, we apply the Kao [81] panel cointegration as follows: We apply the fixed effect model as per Equation (10), and then the stationarity of the residual from Equation (10) can be tested in Equation (11). The stationarity of the residual can be considered for a cointegration in the panel model of Equation (10). Then, the Fisher-Johansen methodology of Maddala and Wu [80] based on Johansen [82] can be applied to verify the panel cointegration, as follows: The probability values from Trace and Maximum-Eigen tests can be estimated for each GCC country using Equations (12) and (13), respectively, and the combined probability can be estimated using Equation (14) for the GCC panel. Afterward, the Pedroni [83] panel cointegration can also be applied to verify the cointegration from the previous two techniques discussed above, in the following way: After cointegration tests, we proceeded to calculate the impact of OP on the energy depletion. At first, we utilized the methodology of Pesaran [84] as follows: Equation (22) is the pooled mean group (PMG) estimation. The impact of OP on energy depletion can be estimated from normalized coefficients θ. Afterward, we apply the fully modified ordinary least squares (FMOLS) of Pedroni [85], as follows: The heterogeneous Equation (23) can be regressed. Then, the coefficients can be modified using Equation (24). The long-run effects from PMG and FMOLS can be verified from the dynamic ordinary least squares (DOLS) of Kao and Chiang [86], in the following way: Equation (25) can be estimated, introducing lead and lag variables of independent variables, and Equation (26) can be used to modify the long-run effects.  Table 1 shows the DF-GLS test to verify the order of integration. The OPPt and OPNt variables are the same for all the GCC countries; thus, it is tested once. However, the energy depletion variable is different for each GCC country, so it is tested separately for each country. The results show that all series are nonstationary at the level and stationary at the first difference.   Table 1 shows the DF-GLS test to verify the order of integration. The OPP t and OPN t variables are the same for all the GCC countries; thus, it is tested once. However, the energy depletion variable is different for each GCC country, so it is tested separately for each country. The results show that all series are nonstationary at the level and stationary at the first difference.  Table 2 shows the bound test's F-values estimated from the individual country's model using Equation (5). To verify cointegration, we use the efficient critical F-values from Kripfganz and Schneider [87]. The estimated F-values show the cointegration in the models of Bahrain, Kuwait, and Qatar at the 10% level of significance and in the models of Saudi Arabia and UAE at 1%. The bound could not corroborate the cointegration in Oman's model, which is alternately verified through the negative parameter of ECT t−1 [77], reported in Table 3. Hence, we may claim cointegration in all the estimated models of GCC countries. The p-values from diagnostic tests are more than 0.1. Hence, models are econometrically reliable.  Table 3 shows that increasing OP has a positive impact on energy depletion in all GCC countries in the long run. Moreover, elasticity is greater than one in the case of all countries except Kuwait. This means that 1% increasing oil price depletes energy more than 1%. Hence, energy depletion is found to be more sensitive to the increasing OP. The decreasing OP also has a positive effect on the energy depletion in all the GCC countries. This means that decreasing OP helps to reduce the energy depletion in the GCC countries. Moreover, this effect is found to be elastic for Bahrain, Kuwait, and UAE, and elasticity is near-unity for Oman and Qatar. This elasticity in the Saudi Arabia model is found to be the least among other GCC countries. This may be due to the reason that the Saudi oil exports' dependency is highest compared to other GCC countries. In Qatar's model, the estimated oil price elasticity of energy depletion indicates the fact that Qatar's energy export is dominated by liquefied natural gas (LNG) sales. A significant portion of LNG is used to sell with the long-term contracts, which makes the supply and demand less responsive to the global oil price. Additionally, LNG is hard to store, which prevents Qatar's supply to respond to the oil price. Natural gas and oil markets conceivably have different elasticity, so the country's energy mix reflects the estimated elasticity. The estimated effect of increasing oil price is found to be elastic on the energy depletion in all GCC countries except Kuwait. The estimated elasticity is found greater in OPEC member GCC countries except Kuwait compared to non-member countries. The elastic effect of increasing oil price may be claimed due to the reason that increasing oil price supports the overall macroeconomic performance of oil-dependent GCC economies. Therefore, these countries are expected to increase the oil production to enjoy more oil rents in the oil price rises' periods. It also shows a great oil production reserve capacity of these countries, which enable them to increase the oil production in response to oil price rises. However, a low elasticity in the case of Kuwait shows the low capacity of this country to increase the production in response of increasing oil price.

Results and Discussions
The estimated elasticity of decreasing oil price is found to be less than that of increasing oil price in all GCC countries except Kuwait. Moreover, the elasticity of decreasing oil price is found to be more in the OPEC member GCC countries, except Saudi Arabia, than that of non-member countries. It shows the effect of OPEC production cuts' agreements among the OPEC member GCC countries in the periods of oil price declines. A low elasticity of oil price decline in Saudi Arabia realizes its heavy dependence on the oil production to sustain the macroeconomic performance of economy. For example, more than 40% of Saudi income and more than 90% of government revenues depend on the oil revenues. Hence, decreasing oil price is a big challenge for the sustainability of the domestic economy. Consequently, heavy oil production cuts in the times of oil price crises are not expected in Saudi Arabia. On the other hand, Saudi Arabia needs to cut the oil production as per OPEC agreements to increase the oil price in the times of oil price declines. Here, perception of a high elasticity is expected in the oil price decline periods. Contrarily, in the 2008 production dispute, poor OPEC countries were asked to cut the oil production in 2008 to increase the oil price but Saudi Arabia walked out on this session. Moreover, in the recent prolonged oil price crisis, it was very hard for the Saudi economy to make larger cuts in oil production to protect the economy from the budget and external account deficits.
After discussions of the elasticity of the effects, we apply the Wald test to test the H 0 of symmetry. The estimated chi-square (p-value) is 4.8754 (0.0272), 103.0008 (0.0000), and 3.3028 (0.0768) for Bahrain, Kuwait, and Saudi Arabia, respectively, and H 0 is rejected. Hence, the increasing and decreasing OP have an asymmetrical impact on the depletion in Bahrain, Kuwait, and Saudi Arabia. The signs of the coefficient are the same in these countries, but the magnitude of effects is different. The impact of the increasing OP is more than the impact of decreasing OP in Bahrain and Saudi Arabia. However, the coefficient of decreasing OP is more than the coefficient of increasing OP in Kuwait. The estimated chi-square (p-value) is 1.1055 (0.2992), 0.6407 (0.4234), and 0.8798 (0.3483) for Oman, Qatar, and UAE, respectively, and the symmetry is proven for these countries.
In the short-run analyses, negative coefficients of ECT t−1 corroborated the short-run relationships in the models of all investigated countries. The increasing OP has a positive effect on energy depletion in all the GCC countries except Saudi Arabia. Moreover, the price elasticity estimate is found to be unity for Oman and less than one for the rest of the countries. The decreasing OP has a positive effect on energy depletion in Bahrain and Oman and has insignificant effects on the rest of countries. The asymmetric relationship of OP and energy depletion is claimed in all countries except Bahrain and Oman due to the insignificance of any one of the effects. We apply the Wald test, and the estimated chi-square (p-value) is 2.6572 (0.1111) and 7.7008 (0.0055) for Bahrain and Oman, respectively. Hence, the relationship between OP and energy depletion is established to be symmetric in the case of Bahrain and asymmetric in the case of Oman.
After the time series analyses, we carry out the panel analyses to test the overall impact of OP on the energy depletion in the GCC region. At first, we conduct panel unit root analyses using Fisher-ADF and Fisher-PP tests, and the results are reported in Table 4. Both tests confirm that all variables are stationary at the first difference, and we may move to cointegration analyses.  The Pedroni test, in Table 5, proves the existence of strong cointegration with three within-dimension and three between-dimension statistics. The Kao test also shows the stationary residual series; hence, cointegration is proved. Lastly, the Fisher-Johansen test shows the one and one cointegration vector in each Trace and Max-Eigen tests. Hence, the cointegration is confirmed through all the tests in the relationship between OP and energy depletion in the GCC region. Table 6 shows the impact of OP on the energy depletion in the GCC panel. Both increasing and decreasing OP have a positive impact on energy depletion. Then, we apply the Wald test on the coefficients of OPP it and OPN it . The estimated chi-square (p-value) is 0.2142 (0.8917), 12.4757 (0.0004), and 9.4115 (0.0022) in the estimations of PMG, FMOLS, and DOLS, respectively. Hence, the symmetry is corroborated in the PMG estimates, and asymmetry is proved in the estimates of FMOLS and DOLS. Mixed evidence of symmetry and asymmetry is found in the investigated relationship. First, this may be due to aggregation biasness in the panel estimates. Further, we may conclude the asymmetry in the panel results due to the reason that we find more evidence of asymmetry in the time series analyses as well.

Conclusions
OP may have a great role in the economies of oil exporters' countries. Further, it may be responsible for the depletion of energy resources in the world due to the over-extraction of energy to exploit the oil rents. This present research explores the impact of OP on the energy depletion of GCC countries from 1970 to 2017. We corroborate the cointegration in the time and panel data estimates. In the panel estimates, increasing and decreasing OP have a positive effect on energy depletion. The asymmetry is also corroborated with different magnitudes of impacts. The increasing OP has a greater energy depletion effect than the decreasing OP. The panel estimates may carry the aggregation biasness. Hence, we conduct time series analyses for each GCC country separately, to gain more insights into the results.
In the long-run time-series analyses, we discover that increasing OP has a positive impact on the energy depletion in all the GCC countries, with an estimated elasticity more than one in the case of all GCC countries except Kuwait. Therefore, 1% increasing oil price is found responsible for depleting more than 1% energy resources. The decreasing OP also has a positive effect on the energy depletion of all GCC countries with an elasticity more than unity or near to one in the case of all countries except Saudi Arabia. This means that decreasing oil price helps in reducing energy depletion. Saudi Arabia is a more oil-dependent economy compared to other GCC countries. Therefore, decreasing oil price could reduce the energy depletion less than proportionately in Saudi Arabia. The impact of OP on the energy depletion is found to be asymmetrical in terms of the different magnitude of effects in Bahrain, Kuwait, and Saudi Arabia. Further, the impact of increasing OP is found to be more than the impact of decreasing OP in Bahrain and Saudi Arabia. Moreover, symmetry is corroborated in Oman, Qatar, and UAE. Increasing OP has a positive impact on energy depletion in all the GCC countries except Saudi Arabia in the short run and decreasing OP has positive effects on energy depletion in Bahrain and Oman. Further, the short-run relationship asymmetry is found in all GCC countries except Bahrain.