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Supply flexibility in the shale patch: Facts, no fiction

Hilde Bjørnland ()

No No 08/2019, Working Papers from Centre for Applied Macro- and Petroleum economics (CAMP), BI Norwegian Business School

Abstract: In two recent papers, Kilian and Zhou (2019) and Kilian (2019) have criticized Bjørnland, Nordvik, and Rohrer (2017), arguing that our finding of a large price elasticity of output for shale producers is not credible. We welcome a discussion of our methods and findings, but the criticisms made in these two papers are inaccurate and mischaracterize our analysis and results. In this note I address the criticism that has been made, arguing that our findings support the notion that the degree of output fl exibility is dependent on the production technology in question. Furthermore, I argue that knowledge that shale producers are more price elastic than conventional oil producers could have far reaching implications for the industry, for macroeconomic outcomes, and for policy analysis.

Pages: 14 pages
Date: 2019-11
New Economics Papers: this item is included in nep-ene
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