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Fracking and Structural Shifts in Oil Supply

Author

Listed:
  • W. D. Walls

    (University of Calgary)

  • Xiaoli Zheng

Abstract

The adoption of hydraulic fracturing (fracking) and horizontal drilling technology substantively altered the structure of oil supply. Using disaggregate state-level data from the U.S, this paper provides empirical evidence that oil supplies are now asymmetric with respect to price changes as a result of the adoption of new production methods. The changed structure of U.S. oil supply---particularly the low supply elasticities for price declines and large supply elasticities for price increases---is consistent with the ineffectiveness of OPEC policies intended to drown fracking American producers in oil.

Suggested Citation

  • W. D. Walls & Xiaoli Zheng, "undated". "Fracking and Structural Shifts in Oil Supply," Working Papers 2020-01, Department of Economics, University of Calgary, revised 30 Jun 2020.
    • Handle: RePEc:clg:wpaper:2020-01
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    Keywords

    Fracking; Oil Supply; OPEC;
    All these keywords.

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • 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
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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