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Oil Market

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PostPosted: Wed Oct 14, 2015 4:48 pm    Post subject: Oil Market Reply with quote


If oil stayed around $100 a barrel, U.S. tight oil production would be about 6 million instead of 5 million barrels a day.

So, U.S. tight oil production fell closer to 15% over the past year from where it would otherwise be.

Many countries had declining oil production, while oil was around $100 a barrel (e.g. because of depletion):

World GDP has been roughly flat over the past five years:



The Chase researchers found 73 cents in extra spending on other items for every dollar saved at the gasoline pump. Restaurants and groceries were the two biggest areas where spending was observed to increase.

One limitation of the data set is that most car purchases are not done with credit cards. We know from the aggregate data that increased car purchases are a big component of the consumer response to lower gasoline prices. Thus the total extra spending is likely to be significantly higher than the 73% measured directly.



It seems, consumers would’ve responded similarly to a tax cut when gasoline prices were high without the loss of oil production and its multiplier effects.

In other words, both consumer and producer surplus would’ve been greater with a tax cut, because of higher disposable, and aggregate, income when gasoline prices were high.

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