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Fracking and Structural Shifts in Oil Supply

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  • W.D. Walls
  • 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, 2022. "Fracking and Structural Shifts in Oil Supply," The Energy Journal, , vol. 43(3), pages 1-32, May.
    • Handle: RePEc:sae:enejou:v:43:y:2022:i:3:p:1-32
    DOI: 10.5547/01956574.43.3.wwal
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    References listed on IDEAS

    as
    1. Dermot Gately & Hillard G. Huntington, 2002. "The Asymmetric Effects of Changes in Price and Income on Energy and Oil Demand," The Energy Journal, , vol. 23(1), pages 19-55, January.
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    More about this item

    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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