Evidence of Energy-Related Uncertainties and Changes in Oil Prices on U.S. Sectoral Stock Markets
Year: 2025
Type: article
Abstract: This paper examines the relationship between stock prices, energy prices and climate policy uncertainty using 11 sectoral stocks in the US market. Evidence confirms that rising prices of energy commodities positively affect not only the energy & oil sector stocks but also create spillover effects across other sectors. Notably, all sectoral stocks, except those in real estate, show resilience to increases in crude oil and gasoline, suggesting potential hedging benefits. The findings reveal that sectoral stock returns are generally negatively affected by several types of uncertainty, including climate policy uncertainty, economic policy uncertainty, and oil price uncertainty, as well as energy & environmental regulation induced equity market volatility and the energy uncertainty index. These adverse effects hold across sectors, with few exceptions. Evidence reveals that the feedback effect between climate policy uncertainty changes and oil price changes produces an adverse impact on stock returns. Omitting these uncertainty factors from analyses could lead to biased estimates in the relationship between stock and energy prices.
Source: Mathematics
DOI: 10.3390/math13111823
Authors: Fu-Lai Lin, Thomas C. Chiang, Yu-Fen Chen
Institutions: Dayeh University, Drexel University
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
SDG: Climate action
Open Access status: gold
Estimated APC paid: $3,137
OpenAlex ID: W4410901650