The Brent price of crude oil declined from $112 in June 2014 to a low of $31 in January 2016 (both nominal prices), a cumulative decrease of more than 70%. Some attribute the decline to increased oil production due to the U.S. shale revolution. This paper proposes a variety of diagnostics to assess the how consistent this explanation is with the data. I find that the data are broadly inconsistent with this attribution of the decline to shale oil. Rather, the data are more consistent with a demand-side explanation of weakening global economic conditions and demand for commodities, including but not limited to oil. In summary, there is no evidence that the U.S. shale revolution played a significant role in the decline in oil prices since 2014. Rather, the evidence suggests that weakening oil demand played a much stronger role in driving the 2014 decline in oil prices.
Journal Article — May 15, 2019
The Unconventional Oil Supply Boom: Aggregate Price Response from Microdata
An analysis of the price responsiveness of US conventional and unconventional oil supply across three key stages of oil production: drilling, completion, and production.
Press Release — May 15, 2019
New Report on State Policy Options to Price Carbon from Electricity
Press Release — May 8, 2019