The Shale Revolution and the Dynamics of the Oil Market
83 Pages Posted: 8 Jul 2020
Date Written: June, 2020
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%.
JEL Classification: Q41, C32
Suggested Citation: Suggested Citation
Balke, Nathan S. and Jin, Xin and Yucel, Mine Kuban, The Shale Revolution and the Dynamics of the Oil Market (June, 2020). FRB of Dallas Working Paper No. 2021, Available at SSRN: https://ssrn.com/abstract=3645597 or http://dx.doi.org/10.24149/wp2021
Do you have negative results from your research you’d like to share?
Feedback
Feedback to SSRN
If you need immediate assistance, call 877-SSRNHelp (877 777 6435) in the United States, or +1 212 448 2500 outside of the United States, 8:30AM to 6:00PM U.S. Eastern, Monday - Friday.