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Monetary Policy and Crude Oil

Prices, Production and Consumption Basil Oberholzer, Global Infrastructure Basel Foundation, Switzerland
The global crude oil market is critically important in many respects. It is the fuel that drives the global economy and, as such, is the focus of climate policies. Moreover, crude oil is the basis of a tradable financial asset. It is therefore connected to several outstanding macroeconomic developments of recent years, including financial market fluctuations, the financial crisis and the exceptional conduct of monetary policy. This book investigates the impacts of monetary policy and the financial system on the global crude oil market. Furthermore, it outlines how monetary policy may also be used to guarantee stability and to contribute to ecological sustainability.

Extent: 304 pp
Hardback Price: $140.00 Web: $126.00
Publication Date: 2017
ISBN: 978 1 78643 788 4
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  • Economics and Finance
  • Energy Economics
  • Environmental Economics
  • Money and Banking
  • Post-Keynesian Economics
  • Environment
  • Energy Economics
  • Environmental Economics
The global crude oil market is critically important in many respects. It is the fuel that drives the global economy and, as such, is the focus of climate policies. Moreover, crude oil is the basis of a tradable financial asset. It is therefore connected to several outstanding macroeconomic developments of recent years, including financial market fluctuations, the financial crisis and the exceptional conduct of monetary policy. This book investigates the impacts of monetary policy and the financial system on the global crude oil market. Furthermore, it outlines how monetary policy may also be used to guarantee stability and to contribute to ecological sustainability.

This unique and innovative book will appeal to students and economists interested in macroeconomics, the environment, energy and monetary policy. It will also be essential reading for policy makers and those interested in economic policy that will benefit both society and the environment.
‘With this unique book, Basil Oberholzer takes us into a rarely explored field. Although oil is a natural resource for wealth production, the oil price and the oil market are largely influenced by financial speculation in the futures market. Basil Oberholzer sheds light on the links between monetary policy, speculation, oil prices, economic stability and ecological sustainability, notably thanks to ingenious stock-flow consistent modeling. The analysis is brilliant.’
– Edwin Le Heron, University of Bordeaux, France

‘We all know now that monetary expansion impacts financial asset prices. Oberholzer comes up with an intriguing twist to this argument by claiming that expansionary monetary policy has a positive impact on oil prices because it induces speculative activity in the futures market of oil. To back this, the author offers an original stock-flow consistent model which combines the financial and the real sides of the economy, as well as the oil market, and he provides some interesting empirical evidence.’
– Marc Lavoie, University of Ottawa, Canada, and University of Paris 13, France

‘This book unveils how and why monetary policy decisions, notably by the US Federal Reserve, affect the crude oil market at the global level, impacting on oil prices as well as on oil production, thereby affecting financial stability and environmental conditions negatively. Basil Oberholzer puts forward an innovative policy mix that addresses both these issues through an oil-price targeting system combined with various market-based fiscal policy tools. This volume must be read by all policy makers around the world.’
– Sergio Rossi, University of Fribourg, Switzerland
Contents: PART I FACTS AND THEORY OF MONETARY POLICY AND CRUDE OIL 1. The Crude Oil Market and its Driving Forces 2. Monetary Policy and Crude Oil: A Theoretical Analysis PART II MONETARY POLICY AND CRUDE OIL IN THE REAL WORLD 3. US Monetary Policy and the Global Crude Oil Market 4. Empirical Evidence: Monetary Policy Impacts on Oil Market Variables PART III ACHIEVING STABILITY AND SUSTAINABILITY: ECONOMIC POLICY MAKING 5. Economic Policy Propositions: An Overview 6. An Economically Stable Way Out of Fossil Energies Index