Hit-and-Run Competition in the New Oil Market Order

Abstract

In recent years the oil market has undergone relevant changes, the most evident being the reduction in prices observed from 2014-15. Many tend to associate these changes with temporary factors on the supply or demand side.

The author in this paper discusses the importance of the "Shale oil revolution", affirming that this new element introduces structural, and not temporary, alterations in the oil market. This conclusion is based on the utilization of the Contestable market theory and its innovative application in describing the new oil market setup.

Keywords: Oil markets, Shale oil, Contestable Market Theory, Energy

JEL Classification: Q41, L71, F12