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Modelling of Economic Oscillations of Shale Oil Production on the Basis of Analytical Solutions of a Differentiation Equation with a Retarded Argument

Author

Listed:
  • Malanichev, A.

    (New Economic School, Moscow, Russia)

Abstract

Shale oil production is considered to be one of the important determinants of oil price slump in 2014-2016. According to some experts, shale oil became a new market "regulator", ousted OPEC. Shale oil production is characterized by non-trivial dynamics. After an accelerated growth in 2010-2015, a period of fluctuations in production caused by the volatility of oil prices followed. The paper develops approach to the shale production modelling on the base of the analytical solutions of differential equation with retarded argument. The differential equation reflects the fact that production change consists of a sum of new debits and the natural process of base production decline. Besides, possibilities of origination and prerequisites of endogenous economic oscillations of shale oil production are studied. Calculations, implemented for economic and technological characteristics given for period from December 2014 to May 2017, showed a possibility of existence of oil production oscillation with period of 33 month, that does not contradict to observations. In general, the proposed approach can be used as a nonlinear structural method for forecasting oil production and corresponding price component, connected with production change.

Suggested Citation

  • Malanichev, A., 2018. "Modelling of Economic Oscillations of Shale Oil Production on the Basis of Analytical Solutions of a Differentiation Equation with a Retarded Argument," Journal of the New Economic Association, New Economic Association, vol. 38(2), pages 54-74.
    • Handle: RePEc:nea:journl:y:2018:i:38:p:54-74
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting
    • Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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