The U.S. Shale Oil Boom, the Oil Export Ban, and the Economy: A General Equilibrium Analysis / Nida Çakir Melek, Michael Plante, Mine K. Yücel.

Format:

Book

Author/Creator:

Melek, Nida Çakir.

Contributor:

National Bureau of Economic Research.

Plante, Michael.

Yücel, Mine K.

Series:

Working Paper Series (National Bureau of Economic Research) no. w23818.

NBER working paper series no. w23818

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

U.S. Shale Oil Boom, the Oil Export Ban, and the Economy

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2017.

Summary:

This paper examines the effects of the U.S. shale oil boom in a two-country DSGE model where countries produce crude oil, refined oil products, and a non-oil good. The model incorporates different types of crude oil that are imperfect substitutes for each other as inputs into the refining sector. The model is calibrated to match oil market and macroeconomic data for the U.S. and the rest of the world (ROW). We investigate the implications of a significant increase in U.S. light crude oil production similar to the shale oil boom. Consistent with the data, our model predicts that light oil prices decline, U.S. imports of light oil fall dramatically, and light oil crowds out the use of medium crude by U.S. refiners. In addition, fuel prices fall and U.S. GDP rises. We then use our model to examine the potential implications of the former U.S. crude oil export ban. The model predicts that the ban was a binding constraint in 2013 through 2015. We find that the distortions introduced by the policy are greatest in the refining sector. Light oil prices become artificially low in the U.S., and U.S. refineries produce inefficiently high amount of refined products, but the impact on refined product prices and GDP are negligible.

Notes:

Print version record

September 2017.