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Oklahoma earthquakes and the price of oil

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  • Roach, Travis

Abstract

The process of hydraulic fracturing has unlocked an unprecedented amount of oil and gas in the United States. Hydrocarbons are not the only output from this process, though, as billions of barrels of “produced” water are extracted and subsequently pumped back underground. This process of injecting produced water into disposal wells has been causally linked to the rise in earthquakes. Here I show how the amount of earthquakes in Oklahoma are positively linked to the price of oil, and further find that the decrease in earthquake activity in Oklahoma is due to both the drop in oil prices and the regulatory directives of regional authorities. The estimated impact of the various shut-in policies have been small compared to the reduction in earthquakes due to the broad price decline, though. I find that the drop in oil prices that began in mid-2014 led to as large of a reduction in earthquakes as the combined effect of new policies that started in March of 2015.

Suggested Citation

  • Roach, Travis, 2018. "Oklahoma earthquakes and the price of oil," Energy Policy, Elsevier, vol. 121(C), pages 365-373.
    • Handle: RePEc:eee:enepol:v:121:y:2018:i:c:p:365-373
    DOI: 10.1016/j.enpol.2018.05.040
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    Cited by:

    1. Matthijs Jan Kallen & Bert Scholtens, 2021. "Movers and Shakers: Stock Market Response to Induced Seismicity in Oil and Gas Business," Energies, MDPI, vol. 14(23), pages 1-12, December.
    2. Hitaj, Claudia & Boslett, Andrew J. & Weber, Jeremy G., 2020. "Fracking, farming, and water," Energy Policy, Elsevier, vol. 146(C).

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    More about this item

    Keywords

    Earthquakes; Hydraulic fracturing; Oil and gas extraction; Regulation;
    All these keywords.

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
    • Q35 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Hydrocarbon Resources
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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