The interplay between natural gas consumption, oil consumption, and economic growth: an empirical evidence

The study examines and analyses the causality relationships between energy consumption, economic growth, trade, urbanisation, and industrialisation in the Caspian countries during the period from 1998 to 2021. In order to investigate the implications and effects of the energy consumption on the economic activity in this region, we computed two functions which include the following independent variables: global natural gas price, natural gas production, oil consumption, global oil price, oil production, GDP per capita, exports, imports, industrialisation, and urbanisation. By applying the Johansen cointegration test and the panel fully modified ordinary least square (FMOLS) regression method, the results showed that natural gas variables and oil variables are cointegrated in the mentioned period. Natural gas consumption and oil consumption were shown to have a positive impact on the level of GDP per capita in the long run. The results of the Dumitrescu-Hurlin causality test revealed the important and essential vital role of the natural gas and crude oil in underpinning and continuously supporting the efficiency of the energy sector within the Caspian countries, while the growth, conservation, and feedback hypotheses are confirmed. A major implication of this study is to improve the energy security within the Caspian countries by establishing and building energy partnerships in the near future.