Güntner, J., Irlacher, M., & Öhlinger, P. (2024). Not All Oil Types are Alike in Trade Substitution. Nature Communications, 15, 7476.
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Motivated by the ongoing war in Ukraine and the public debate on sanctioningcrude oil imports from Russia, we estimate the elasticity of substitutionbetween different crude oil types. UsingEuropean data on country-level crudeoil imports by theirfield of origin, we argue that crude oil is far from ahomogenous good, and that the relevant substitutability for analyzing theimpact of trade sanctions must account for the quality of different oil types interms of their density and sulfur content. Distinguishing crude oil imports bytheir chemical composition, the elasticity of substitution between types issubstantially lower than suggested byprevious estimates. Our results alsosuggest that, by neglecting these differences in quality, standard estimatesunderestimate the production disruptions and price effects in crude oilrefining resulting from sanctions.

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Güntner, J., & Öhlinger, P. (2022). Oil price shocks and the hedging benefit of airline investments. Journal of Economic Dynamics and Control, 143, 104507.
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In the light of finite oil reserves, Persian Gulf oil-exporting economies have recently undertaken major investments in their domestic travel and tourism industries. Building on the Bayesian SVAR model of the global oil market in Baumeister and Hamilton (2019), we investigate the conditional comovement of airline stock returns with real oil prices in response to structural oil supply and demand shocks. We find that investing in the Datastream World Airline Index offers a hedging benefit conditional on oil supply, consumption demand, and inventory demand shocks, whereas there is no evidence of systematic positive or negative comovement following shocks to world economic activity and airline stock returns.

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