Long-term macroeconomic impacts of US unconventional Oil & Gas production : A general equilibrium perspective

This paper assesses the macroeconomic impact of long-term shale gas and light tight oil production in the United States. We endogenize those resources production within a Computable General Equilibrium (CGE) framework which technical inertias and short-term desiquilibrium of a second best world. Our scenarios find moderate and bounded GDP increases despite increasing unconventional resources production. Lower energy prices and energy imports needs creates long-term lock-ins which later on slow down GDP growth differential. In fact, an early higher refined oil dependency on the demand side face later on increased tensions on oil markets due to Middle East resource depletion. We study the tradeoff between long-term competitiveness and the real exchange rate appreciation caused by resource production, and find little evidence of a positive effect on investment in the production of energy intensive tradables goods. We simulate a policy that would moderate such a dutch disease effect. The conditions under which the US could benefit from lower energy prices to increase its competitiveness are bounded by its ability to manage its current account in the short-term accordingly, with adverse general equilibrium effects on GDP and employments.