Implications of the “Fracking Revolution”

The oil price which has hovered around US$ 110 over the past four years, has now slid to US$ 70. Many analysts have attributed this to the unexpected magnitude of the U.S. fracking revolution (new techniques of horizontal drilling and hydraulic fracturing) which have completed around 20,000 new wells since 2010, more than ten times Saudi Arabia’s tally. It has also boosted America’s oil production by a third to nearly 9 m barrels a day, just about 1 m barrel/day short of Saudi Arabia’s output. In this context, ERF has commissioned two papers to address the implications of these development. The first addresses the impact of fracking on the global energy market, including the equilibrium price of oil and the economic and geo-political aspects, especially from the perspective of the Arab oil countries (by Lutz Kilian). The second would assess the implications of the fracking revolution on the Arab oil economies (both importers and exporters distinguishing between the GCC and the populous group) by Kamiar Mohaddes.