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. 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.
    3. 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.
    4. Álvarez, Irma Alonso & Di Nino, Virginia, 2017. "The oil market in the age of shale oil," Economic Bulletin Articles, European Central Bank, vol. 8.
    5. 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.
    6. 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.
    7. 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.
    8. 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.
    9. 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.
    10. 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.
    11. repec:hal:spmain:info:hdl:2441/3vsrea3gla9r5oaa2cle5jrqfh is not listed on IDEAS
    12. 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.
    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. Tang, Le & Jefferson, Gary, 2024. "A DSGE model of energy efficiency with vintage capital in Chinese industry," Economic Modelling, Elsevier, vol. 132(C).
    3. 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.
    4. Foroni, Claudia & Guérin, Pierre & Marcellino, Massimiliano, 2017. "Explaining the time-varying effects of oil market shocks on US stock returns," Economics Letters, Elsevier, vol. 155(C), pages 84-88.
    5. Scott M. R. Mahadeo & Reinhold Heinlein & Gabriella Deborah Legrenzi, 2019. "Contagion Testing in Embryonic Markets under Alternative Stressful US Market Scenarios," CESifo Working Paper Series 8029, CESifo.
    6. Gupta, Kartick & Krishnamurti, Chandrasekhar, 2018. "Do macroeconomic conditions and oil prices influence corporate risk-taking?," Journal of Corporate Finance, Elsevier, vol. 53(C), pages 65-86.
    7. Reinhold Heinlein & Scott M. R. Mahadeo, 2023. "Oil and US stock market shocks: Implications for Canadian equities," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 56(1), pages 247-287, February.
    8. Demirer, Riza & Gupta, Rangan & Pierdzioch, Christian & Shahzad, Syed Jawad Hussain, 2020. "The predictive power of oil price shocks on realized volatility of oil: A note," Resources Policy, Elsevier, vol. 69(C).
    9. Yoosoon Chang & Ana María Herrera & Elena Pesavento, 2023. "Oil prices uncertainty, endogenous regime switching, and inflation anchoring," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 38(6), pages 820-839, September.
    10. Yonghong Jiang & Gengyu Tian & Bin Mo, 2020. "Spillover and quantile linkage between oil price shocks and stock returns: new evidence from G7 countries," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 6(1), pages 1-26, December.
    11. Smyth, Russell & Narayan, Paresh Kumar, 2018. "What do we know about oil prices and stock returns?," International Review of Financial Analysis, Elsevier, vol. 57(C), pages 148-156.
    12. Sardar, Naafey & Sharma, Shahil, 2022. "Oil prices & stock returns: Modeling the asymmetric effects around the zero lower bound," Energy Economics, Elsevier, vol. 107(C).
    13. Alkathery, Mohammed A. & Chaudhuri, Kausik & Nasir, Muhammad Ali, 2023. "Dependence between the GCC energy equities, global clean energy and emission markets: Evidence from wavelet analysis," Energy Economics, Elsevier, vol. 121(C).
    14. 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).
    15. Wu, Xi & Wang, Yudong, 2021. "How does corporate investment react to oil prices changes? Evidence from China," Energy Economics, Elsevier, vol. 97(C).
    16. Kang, Sang Hoon & Arreola Hernandez, Jose & Rehman, Mobeen Ur & Shahzad, Syed Jawad Hussain & Yoon, Seong-Min, 2023. "Spillovers and hedging between US equity sectors and gold, oil, islamic stocks and implied volatilities," Resources Policy, Elsevier, vol. 81(C).
    17. Mo, Xuan & Su, Zhi & Yin, Libo, 2019. "Can the skewness of oil returns affect stock returns? Evidence from China’s A-Share markets," The North American Journal of Economics and Finance, Elsevier, vol. 50(C).
    18. 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.
    19. Demirer, Rıza & Ferrer, Román & Shahzad, Syed Jawad Hussain, 2020. "Oil price shocks, global financial markets and their connectedness," Energy Economics, Elsevier, vol. 88(C).
    20. 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).

    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.