Quantitative Effects of the Shale Oil Revolution

36 Pages Posted: 25 Jun 2015

Multiple version iconThere are 2 versions of this paper

Date Written: June 24, 2015

Abstract

The aim of this paper is to analyse the impact of the so-called "shale oil revolution" on oil prices and economic growth. We employ a general equilibrium model of the world oil market in which Saudi Arabia is the dominant firm, with the rest of the producers as a competitive fringe. Our results suggest that most of the expected increase in US oil supply due to the shale oil revolution has already been incorporated into prices and that it will produce an additional increase of 0.2 percent in the GDP of oil importers in the period 2010-2018. We also employ the model to analyse the collapse in oil prices in the second half of 2014 and conclude that it was mainly due to positive unanticipated supply shocks.

Keywords: Saudi Arabia, general equilibrium, shale oil

JEL Classification: Q41, Q47, E17

Suggested Citation

Manescu, Cristiana and Nuno, Galo, Quantitative Effects of the Shale Oil Revolution (June 24, 2015). Banco de Espana Working Paper No. 1518. Available at SSRN: https://ssrn.com/abstract=2622469 or http://dx.doi.org/10.2139/ssrn.2622469

Cristiana Manescu

European Commission ( email )

Rue de la loi 170
Brussels, Bruxelles B-1040
Belgium
0032-(0)-496100395 (Phone)

Galo Nuno (Contact Author)

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

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