OPEC's kinked demand curve

Vatter, Marc H.

doi:10.1016/j.eneco.2017.02.010

Cited by 7 publications

(4 citation statements)

References 38 publications

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“…A current production-weighted average of our estimate of long-run elasticity of tight oil supply of 1.95 and conventional non-OPEC supply of 0.24 comes out to 0.53, indicating that shale oil has made non-OPEC supply much more elastic, but still decidedly inelastic. Vatter ( 2017 ) further estimated within-quarter elasticity of non-OPEC supply to be 0.015, well below the 3-month estimate of 0.23 in Table 6 .…”

Section: Econometric Modeling Of Oil Supply In the North Dakota Bakken Shalementioning

confidence: 88%

“…Estimates of supply price elasticity for the more general category of non-OPEC crude oil are much lower, especially in the short term. For example, Golombek et al ( 2018 ), Alhajji and Huettner ( 2000 ), and Vatter ( 2017 ) all had previously estimated the price elasticity of non-OPEC oil supply, of which shale oil represents a subset. Golombek et al ( 2018 ) estimated the long-run price elasticity of non-OPEC supply to be 0.32, citing Alhajji and Huettner ( 2000 ), who estimated it to be 0.29, whereas Vatter ( 2017 ) estimated it to be 0.24.…”

Section: Econometric Modeling Of Oil Supply In the North Dakota Bakken Shalementioning

confidence: 99%

“…For example, Golombek et al ( 2018 ), Alhajji and Huettner ( 2000 ), and Vatter ( 2017 ) all had previously estimated the price elasticity of non-OPEC oil supply, of which shale oil represents a subset. Golombek et al ( 2018 ) estimated the long-run price elasticity of non-OPEC supply to be 0.32, citing Alhajji and Huettner ( 2000 ), who estimated it to be 0.29, whereas Vatter ( 2017 ) estimated it to be 0.24. By way of contrast, the last row in Table 6 shows a much larger value of 1.95.…”

Section: Econometric Modeling Of Oil Supply In the North Dakota Bakken Shalementioning

confidence: 99%

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Price Responsiveness of Shale Oil: A Bakken Case Study

Vatter

Vactor²,

Coburn

2022

Nat Resour Res

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We estimated oil supply from hydraulically fractured horizontal wells completed in North Dakota from March 2015 through May 2019. We modeled impacts on production of price, capital costs, technological progress, well-to-well interference, and location. Two models were developed: One considered production to be a continuous stream (omitting gaps) and the other allowed that production may be discontinuous, with starts, shut-ins, and re-starts. Both gave estimates of price elasticity higher than that of non-OPEC oil supply in general. We confirmed the rapid decline rates from early peaks that characterize shale wells and demonstrated that, although various factors can shift production up or down, the decline rate remains consistent. Given this, and a much shorter development time, shale oil can be ramped up and down more quickly than conventional oil in North America today. Consequently, the price response of shale oil tends to dampen the long-term price cycle and moderate the price shocks that have plagued the market, and the macroeconomy.

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Section: Econometric Modeling Of Oil Supply In the North Dakota Bakken Shalementioning

confidence: 88%

Section: Econometric Modeling Of Oil Supply In the North Dakota Bakken Shalementioning

confidence: 99%

Section: Econometric Modeling Of Oil Supply In the North Dakota Bakken Shalementioning

confidence: 99%

See 1 more Smart Citation

Price Responsiveness of Shale Oil: A Bakken Case Study

Vatter

Vactor²,

Coburn

2022

Nat Resour Res

Self Cite

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“…Markets with limited competition can in some cases give kinked demand curves (Bhaskar, 1988;Maskin and Tirole, 1988), and a multiplicity of kinked demand curve equilibria may exist (see, e.g., Economides, 1984;Yin, 2004;Merel and Sexton, 2010;Vatter, 2017;Cumbul and Virág, 2018;Dupraz, 2023).…”

Section: Contribution To the Literaturementioning

confidence: 99%