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.
Media Highlight — May 12, 2022
S&P Global: "Capacity Markets, though Flawed, Seen as Critical in US Energy Transition"
This story details a May 11 RFF Live event on capacity markets, as well as a new book on the same topic coauthored by RFF University Fellow Todd Aagaard.
On the Issues — May 6, 2022
On the Issues: Climate Disclosure Rule, Volatile Oil Markets, and More
A biweekly newsletter connecting global current events, pressing climate and energy policy news, and economics research from RFF scholars. This week: a proposed climate disclosure rule, volatile oil markets, and more.