A Blessing in Disguise: The Implications of High Global Oil Prices for the North American Market
AbstractWe examine the implications of increased unconventional crude oil production in North America. This production increase has been made possible by the existence of alternative oil-recovery technologies and persistently elevated oil prices that make these technologies commercially viable. We first discuss the factors that have enabled the United States to expand production so rapidly and the glut of oil inventory that has accumulated in the Midwest as result of logistical challenges and export restrictions. Next, we assess the extent to which the increase in U.S. domestic production will affect global supply conditions and whether the U.S. experience can be repeated in other countries with rich unconventional oil sources. The evidence suggests that even in the best-case scenario, the increase in U.S. production will not make a large contribution to global production, so its effect on the price of oil is expected to be limited. Furthermore, the United States enjoys unique infrastructural and technological advantages that make it unlikely that similarly rapid increases in unconventional production can be achieved elsewhere.
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Bibliographic InfoPaper provided by Bank of Canada in its series Working Papers with number 13-23.
Length: 24 pages
Date of creation: 2013
Date of revision:
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International topics; Recent economic and financial developments;
Find related papers by JEL classification:
- Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
- Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
- Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting
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