Ruhr Economic Papers

Ruhr Economic Papers #794

The U.S. Fracking Boom: Impact on Oil Prices

by Manuel Frondel and Marco Horvath

RGS, RUB, RWI, 03/2019, 26 S./p., 8 Euro, ISBN 978-3-86788-922-3 DOI: 10.4419/86788922

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Abstract

As of late 2008, the steady decline of U.S. crude oil production over the last decades was reversed by the
increased adoption of the hydraulic fracturing (“fracking”) technology. Adapting the supply-side model
proposed by Kaufmann et al. (2004) to assess OPEC’s ability to influence real oil prices, this paper investigates the effect of the increase in U.S. oil production due to fracking on world oil prices. Among our key results obtained from (dynamic) OLS estimations, there is a statistically significant negative long-run relationship between increased U.S. oil production and oil prices.

JEL-Classification: Q41, Q32, L71

Keywords: Dynamic OLS; error correction model; shale oil

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