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The Shale Revolution and the Dynamics of the Oil Market

Nathan Balke (), Xin Jin () and Mine Yucel
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Xin Jin: https://www.abdn.ac.uk/business/people/profiles/xjin

No 2021, Working Papers from Federal Reserve Bank of Dallas

Abstract: We build and estimate a dynamic, structural model of the world oil market in order to quantify the impact of the shale revolution. We model the shale revolution as a dramatic decrease in shale production costs and explore how the resultant increase in shale production affects the level and volatility of oil prices over our sample. We find that oil prices in 2018 would have been roughly 36% higher had the shale revolution not occurred and that the shale revolution implies a reduction in current oil price volatility around 25% and a decline in long-run volatility of over 50%.

Keywords: oil price; shale; OPEC (search for similar items in EconPapers)
JEL-codes: Q41 C32 (search for similar items in EconPapers)
Pages: 83
Date: 2020-06-30
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DOI: 10.24149/wp2021

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