The prices of both raw and processed petroleum on the macro economic indicators affect in Turkey

Today, countries turn their attention to geo-economic processes to realize and sustaintheir economic development. This process methodologically focuses more on economics,technology, geography and energy resources rather than politics. These energy resources thatare of great importance are classified under two groups as renewable and non-renewable.Biomass, solar, wind, geothermal and hydraulic energy are in the renewable energyresources. Natural resources that are renewable are demanded more because they are notconsumed, they have little environmental effects, and they cost less.Coal, natural gas, nuclear energy and petroleum are classified under non-renewableenergy resources. They are used more because they produce more energy. However, there areproblems in their use because of their negative environmental effects and high costs.Petroleum resources is the most often used non-renewable energy resource on earth.Because of this, changes in the prices of nature raw petroleum and its products are of greatimportance for both exporting and importing countries.Decreases in the prices of raw petroleum will cause declines in the national incomes ofexporting countries. By the same token, price fluctuations will affect the macro economicindicators of importing countries.Increases in petroleum prices will have changes especially on inflation. Because thecosts of units that use petroleum and petroleum products as their inputs will increase, theirsale prices will change as well. This will cause an increase in inflation.Changes in the prices of petroleum products can cause changes in inflation, nationalincome, foreign trade and exchange rates.Problems that are experienced in Turkey during the periods of economic crises affectthe above mentioned indicators.Under the framework of the input-output analysis in this study, it is expected that therewill be an increase in petroleum products production costs parallel to the share of rawpetroleum costs. It is also expected that this increase will lead to an increase in private andpublic consumption, imports and exports of goods and services, net taxes on production, andpayments to employees. Additionally, it is anticipated that there will be an increase in theprices of water refining and distribution sectors proportional to the share of raw petroleum inproduction costs in these sectors. This increase will possibly cause an increase on the abovementioned indicators.In the regression analysis used in the study, we find that changes in the prices of bothraw and processed petroleum affect four main variables mentioned above.In today?s Turkey, mainly roads are used for transportation. Additionally, petroleumproducts are heavily used in other sectors too. An important part of national income is spentfor petroleum import. Therefore, it is becoming a necessity to turn our attention to alternativeenergy resources.