Is Oil Really a Stumbling Block to Environmental Sustainability? From the Price Perspective

The United States is exposed to the threats of massive carbon dioxide (CO2) emissions generated by non-renewable energy in reaching environmental sustainability. With the wavelet-based quantile-on-quantile approach, this paper delves into the impact of the most typical fossil fuel, oil, on CO2 emissions from a price perspective. The results highlight that oil is a mixed blessing for fostering environmental sustainability in the short–medium run. Mainly, CO2 emissions are more susceptible to positively responding to the bullish oil market in the medium term. Nevertheless, it also reveals the underlying negative relationship rooted in the long run. The results are endorsed by the theoretical mechanisms between energy prices and emissions, which indicate the role of high oil prices in driving long-term CO2 emissions mitigation and environmental sustainability. Therefore, industries should resist the temptation to indulge heavily in short- to medium-term price hikes instead of prudently reacting to the bullish signal. Moreover, under the environmental sustainability ambitions, the strategy of expanding investment in green technologies innovation to reduce the dependence on oil cannot be shelved.