From Importer to Exporter: Oil Shocks and the U.S. Economy

We study how the shale revolution and the U.S. transition from petroleum importer to net exporter have changed the macroeconomic effects of oil shocks. Using oil supply news shocks identified from OPEC announcements, a time-varying model of the U.S. macroeconomy shows that the contractionary effects weakened over time and eventually became expansionary. State-dependent local projections link this change to the U.S. petroleum trade balance. The improvement goes beyond mechanical net export effects: as the terms-of-trade response turns more favorable, consumption, equity valuations, and activity strengthen broadly across sectors and regions, pointing to general-equilibrium income and wealth effects. A counterfactual analysis of the 2022 oil price surge implies sharply different paths for U.S. activity, prices, and monetary policy under the propagation mechanisms prevailing before the shale boom vs. the early 2020s.