The US shale oil production, market forces and the US export ban

Abstract

Purpose The purpose of this paper is to use the novel data from the primary vision to determine the main financial and economic drivers of this revolutionary shale oil production and how these drivers changed after 2016 when the US removed its oil-exporting ban. Design/methodology/approach In this paper, the authors use the vector autoregressive model to assess the dynamic relationships among the Frac Count (FSCN) from the primary vision and the set of financial/macro-economic variables and how this dynamic relationship is altered with the effects of the US export ban before and after the lifting of the export ban. Findings The empirical evidence reveals that a positive shock to New York Mercantile Exchange, Standard and Poor’s 500, rig count, West Texas Intermediate or the US ending oil stocks increase the FSCN but higher interest rates and oil production decrease the FSCN. After the US became one of the major oil producers, it removed its crude export ban in December 2015. The empirical evidence suggests that the shale oil industry gets more integrated with the financial system and becomes more efficient in its production process in the post-2016 era after the export ban was removed. Originality/value The purpose of this paper is to use the novel data from the primary vision to determine the main financial and economic drivers of this revolutionary shale oil production and how these drivers changed after 2016 when the US removed its oil-exporting ban.

The Asymmetric Relationship between Conventional/Shale Rig Counts and WTI Oil Prices

“…Umekwe and Baek (2017) investigate the effects of oil prices and rig count on oil production in several US oil plays. Taneri et al (2021) focus on the dynamics of the frac spread, showing that it is correlated to several variables, such as financial variables, oil stocks and rig count. However, rig count is less volatile than frac spread count.…”