Open AccessThe Relationship Between Oil and Natural Gas Prices on the Malaysian Economic Sectors
Author(s) -
Nur Surayya Mohd Saudi,
Wong Hock Tsen,
Abdul Latif Harun,
Zailin Zainal Ariffin,
Nur Zahidah Syafii,
Ahmad Shakir Mohd Saudi,
Mohd Khairul Amri Kamarudin,
Muhammad Hafiz Md Saad
Publication year - 2018
Publication title -
international journal of engineering and technology
Language(s) - English
Resource type - Journals
ISSN - 2227-524X
DOI - 10.14419/ijet.v7i4.34.23840
Subject(s) - agriculture , subsidy , energy sector , economic sector , secondary sector of the economy , economics , renewable energy , fossil fuel , natural resource , business , agricultural economics , natural resource economics , empirical research , natural gas prices , natural gas , economy , market economy , geography , archaeology , engineering , epistemology , organic chemistry , electrical engineering , biology , ecology , philosophy , chemistry
This study has investigated the relationship between the changes in oil and natural gas prices on the Malaysian economic sectors. Four economic sectors were selected namely manufacturing, services, agriculture, and mining. However, there was less study conducted at the sector level. Hence, the goal of this paper is to explore the impact of oil and gas prices on economic sectors GDP. This study has conducted econometrics modelling based on the ARDL bound testing with the spanning time series data from year 1987 to 2017. The empirical findings revealed that the relationship between the oil and natural gas prices in the manufacturing and services sector is negative, while the agriculture sector showed a positive relationship, and the mining sector showed no relationship. The empirical findings concluded that the manufacturing and services sectors that consumed more energy are dependent on the price changes. Meanwhile, the agriculture sector is a highly subsidised sector which has a positive relationship with energy prices. In the policy recommendation, Malaysia has to apply the energy pricing policy by offering energy subsidy to the high energy consumed sectors. Finally, Malaysia should develop policies that can diversify its energy resources and increase the shares of renewable energy sources.