IDEAS home Printed from https://ideas.repec.org/a/sae/engenv/v35y2024i3p1573-1596.html
   My bibliography  Save this article

The future of the shale industry in light of the fluctuations in global oil prices

Author

Listed:
  • Zaid Zuhaira
  • Jizu Li
  • Hayder Dhahir Mohammed

Abstract

During the twentieth and twenty-first centuries, the oil industry has been pivotal in influencing all countries’ geopolitical, economic, and human development strategies. Until recently, the debate was about peak oil and what would happen after oil finished. However, due to technological advances and hydraulic fracturing, shale oil formations have become economically viable due to the United States’ desire to achieve energy security to make a qualitative shift in the oil industry and the geopolitics of oil. Therefore, this paper deals with an economic model that illustrates the impact of oil price fluctuations to the shale oil and gas companies by analyzing the main determinants of continuity of shale oil and gas companies in production if global oil prices decline or rise. In addition, the study will investigate the effects of OPEC + policy and Covid-19 on the future of shale oil industry. The study will discuss some future scenarios for global energy trends and predict what the shale industry will look like in the future. The study concluded the shale industry faces an internal destructive process (within the industry itself) and external (Renewable energy, OPEC and Covid-19). The stability of oil prices is a critical factor that promotes the shale industry's recovery. However, shale industry is expected to continue with low productivity growth rates and continuing government support for it.

Suggested Citation

  • Zaid Zuhaira & Jizu Li & Hayder Dhahir Mohammed, 2024. "The future of the shale industry in light of the fluctuations in global oil prices," Energy & Environment, , vol. 35(3), pages 1573-1596, May.
    • Handle: RePEc:sae:engenv:v:35:y:2024:i:3:p:1573-1596
    DOI: 10.1177/0958305X221129223
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/0958305X221129223
    Download Restriction: no
    File URL: https://libkey.io/10.1177/0958305X221129223?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Mohaddes, Kamiar & Pesaran, M. Hashem, 2017. "Oil prices and the global economy: Is it different this time around?," Energy Economics, Elsevier, vol. 65(C), pages 315-325.
    2. Samuel D. Barrows, 2020. "Did the US Shale Oil Revolution Ruin Oil Industry Stock Market Returns?," International Journal of Energy Economics and Policy, Econjournals, vol. 10(4), pages 1-8.
    3. Lutz Kilian & Cheolbeom Park, 2009. "The Impact Of Oil Price Shocks On The U.S. Stock Market," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(4), pages 1267-1287, November.
    4. Mohaddes, Kamiar & Pesaran, M. Hashem, 2016. "Country-specific oil supply shocks and the global economy: A counterfactual analysis," Energy Economics, Elsevier, vol. 59(C), pages 382-399.
    5. Saussay, Aurélien, 2018. "Can the US shale revolution be duplicated in continental Europe? An economic analysis of European shale gas resources," Energy Economics, Elsevier, vol. 69(C), pages 295-306.
    6. Agerton, Mark & Hartley, Peter R. & Medlock, Kenneth B. & Temzelides, Ted, 2017. "Employment impacts of upstream oil and gas investment in the United States," Energy Economics, Elsevier, vol. 62(C), pages 171-180.
    7. repec:spo:wpmain:info:hdl:2441/3vsrea3gla9r5oaa2cle5jrqfh is not listed on IDEAS
    8. Majed Al Suwailem & Malik Selemankhel, 2021. "Are Bankruptcies Healthy For The Tight Oil Sector?," Discussion Papers ks--2021-dp02, King Abdullah Petroleum Studies and Research Center.
    9. Merryn Thomas & Tristan Partridge & Barbara Herr Harthorn & Nick Pidgeon, 2017. "Deliberating the perceived risks, benefits, and societal implications of shale gas and oil extraction by hydraulic fracturing in the US and UK," Nature Energy, Nature, vol. 2(5), pages 1-7, May.
    10. Thorbecke, Willem, 2019. "Oil prices and the U.S. economy: Evidence from the stock market," Journal of Macroeconomics, Elsevier, vol. 61(C), pages 1-1.
    11. Peter Erickson & Adrian Down & Michael Lazarus & Doug Koplow, 2017. "Effect of subsidies to fossil fuel companies on United States crude oil production," Nature Energy, Nature, vol. 2(11), pages 891-898, November.
    12. repec:hal:spmain:info:hdl:2441/3vsrea3gla9r5oaa2cle5jrqfh is not listed on IDEAS
    13. Erin N. Mayfield & Jared L. Cohon & Nicholas Z. Muller & Inês M. L. Azevedo & Allen L. Robinson, 2019. "Cumulative environmental and employment impacts of the shale gas boom," Nature Sustainability, Nature, vol. 2(12), pages 1122-1131, December.
    14. Maghyereh, Aktham & Abdoh, Hussein, 2020. "Asymmetric effects of oil price uncertainty on corporate investment," Energy Economics, Elsevier, vol. 86(C).
    15. Ma, Richie Ruchuan & Xiong, Tao & Bao, Yukun, 2021. "The Russia-Saudi Arabia oil price war during the COVID-19 pandemic," Energy Economics, Elsevier, vol. 102(C).
    16. Esmail Ansari & Robert. K. Kaufmann, 2019. "The effect of oil and gas price and price volatility on rig activity in tight formations and OPEC strategy," Nature Energy, Nature, vol. 4(4), pages 321-328, April.
    17. Fischer, Carolyn & Salant, Stephen W., 2017. "Balancing the carbon budget for oil: The distributive effects of alternative policies," European Economic Review, Elsevier, vol. 99(C), pages 191-215.
    18. Álvarez, Irma Alonso & Di Nino, Virginia, 2017. "The oil market in the age of shale oil," Economic Bulletin Articles, European Central Bank, vol. 8.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Arampatzidis, Ioannis & Dergiades, Theologos & Kaufmann, Robert K. & Panagiotidis, Theodore, 2021. "Oil and the U.S. stock market: Implications for low carbon policies," Energy Economics, Elsevier, vol. 103(C).
    2. Afees A. Salisu & Idris Adediran, 2018. "US shale oil and the behaviour of commodity prices," Working Papers 047, Centre for Econometric and Allied Research, University of Ibadan.
    3. Zhang, Zhikai & Wang, Yudong & Xiao, Jihong & Zhang, Yaojie, 2023. "Not all geopolitical shocks are alike: Identifying price dynamics in the crude oil market under tensions," Resources Policy, Elsevier, vol. 80(C).
    4. Cashin, Paul & Mohaddes, Kamiar & Raissi, Mehdi, 2017. "China's slowdown and global financial market volatility: Is world growth losing out?," Emerging Markets Review, Elsevier, vol. 31(C), pages 164-175.
    5. Wong, Jin Boon & Hasan, Mostafa Monzur, 2021. "Oil shocks and corporate payouts," Energy Economics, Elsevier, vol. 99(C).
    6. Martínez-Cañete, Ana R. & Márquez-de-la-Cruz, Elena & Pérez-Soba, Inés, 2022. "Non-linear cointegration between oil and stock prices: The role of interest rates," Research in International Business and Finance, Elsevier, vol. 59(C).
    7. Christina Anderl & Guglielmo Maria Caporale, 2024. "A Global Oil Market Model with Shipping Costs," CESifo Working Paper Series 11551, CESifo.
    8. Tang, Le & Jefferson, Gary, 2024. "A DSGE model of energy efficiency with vintage capital in Chinese industry," Economic Modelling, Elsevier, vol. 132(C).
    9. Smith, L. Vanessa & Tarui, Nori & Yamagata, Takashi, 2021. "Assessing the impact of COVID-19 on global fossil fuel consumption and CO2 emissions," Energy Economics, Elsevier, vol. 97(C).
    10. Kamiar Mohaddes & Mehdi Raissi, 2019. "The US oil supply revolution and the global economy," Empirical Economics, Springer, vol. 57(5), pages 1515-1546, November.
    11. Yin, Libo & Yang, Sen, 2023. "Oil price returns and firm's fixed investment: A production pattern," Energy Economics, Elsevier, vol. 125(C).
    12. Mohaddes, Kamiar & Raissi, Mehdi, 2017. "Do sovereign wealth funds dampen the negative effects of commodity price volatility?," Journal of Commodity Markets, Elsevier, vol. 8(C), pages 18-27.
    13. Afees Adebare Salisu & Idris A. Adediran, 2018. "The U.S. Shale Oil Revolution and the Behavior of Commodity Prices," Econometric Research in Finance, SGH Warsaw School of Economics, Collegium of Economic Analysis, vol. 3(1), pages 27-53, September.
    14. Maghyereh, Aktham & Ziadat, Salem Adel & Al Rababa'a, Abdel Razzaq A., 2024. "Exploring the dynamic connections between oil price shocks and bond yields in developed nations: A TVP-SVAR-SV approach," Energy, Elsevier, vol. 306(C).
    15. Jiménez-Rodríguez, Rebeca, 2022. "Oil shocks and global economy," Energy Economics, Elsevier, vol. 115(C).
    16. Considine, Jennifer & Galkin, Phillip & Hatipoglu, Emre & Aldayel, Abdullah, 2023. "The effects of a shock to critical minerals prices on the world oil price and inflation," Energy Economics, Elsevier, vol. 127(PB).
    17. Hilde C. Bjørnland & Yoosoon Chang & Jamie L. Cross, 2023. "Oil and the Stock Market Revisited: A Mixed Functional VAR Approach," CAMA Working Papers 2023-18, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    18. Charalampos Basdekis & Apostolos G. Christopoulos & Ioannis Katsampoxakis & Stylianos Xanthopoulos, 2024. "Trends and Challenges after the Impact of COVID-19 and the Energy Crisis on Financial Markets," Energies, MDPI, vol. 17(15), pages 1-14, August.
    19. Wu, Xi & Wang, Yudong, 2021. "How does corporate investment react to oil prices changes? Evidence from China," Energy Economics, Elsevier, vol. 97(C).
    20. L. Vanessa Smith & Nori Tarui & Takashi Yamagata, 2020. "Global fossil fuel consumption and carbon pricing: Forecasting and counterfactual analysis under alternative GDP scenarios," RIEEM Discussion Paper Series 2004, Research Institute for Environmental Economics and Management, Waseda University.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:engenv:v:35:y:2024:i:3:p:1573-1596. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.