Energy Information Agency, 2013b, “Technically Recoverable Shale Oil and Shale Gas Resources: An Assessment of 137 Shale Formations in 41 Countries Outside the United States”, June 2013.
This chapter was prepared by Ben Hunt, Martin Sommer, Gabriel Di Bella, Madelyn Estrada, Akito Matsumoto, and Dirk Muir. The authors have benefited from useful discussions with Samya Beidas-Strom, Gian Maria Milesi-Ferretti, Shane Streifel, and several staff members from the Congressional Budget Office, the Federal Reserve, and the Treasury. The opinions expressed in the chapter are those of the authors, and should not be associated with any of the institutions above.
Refined products such as gasoline can be exported. The United States has become a net exporter of refined petroleum products in recent years. Due to this integration with the world market, the U.S. and global gasoline prices have co-moved, despite the large wedge between the U.S. (WTI) and global crude oil benchmarks (Brent).
Calculations in this section were prepared by Gabriel Di Bella.
The WEO includes energy price projections through 2018. For the period after 2018, energy prices are assumed for the purposes of this chapter to grow at 2 percent per year (the oil price is assumed at $84 a barrel in 2018, $97 a barrel in 2025, and $130 in 2040), and GDP is assumed to grow at its trend rate.
Simulations in this section were prepared by Dirk Muir.
However, the savings from lower energy costs would be tangible only in a handful of industries, which make up a small fraction of U.S. GDP. For example, the four non-transport industries with the energy cost share greater than 5 percent of output account for just 1¼ of GDP. The entire durable manufacturing sector (including low energy-intensity industries) accounts for 6½ percent of GDP. Certain industries also use natural gas as feedstock and could in principle benefit from low U.S. natural gas prices to a greater degree than suggested by the data on energy shares—however, sufficiently detailed input-output tables are not readily available.
In a representative agent model, the steady states for the current account and net foreign asset position are indeterminate. A number of approaches have been applied to ensure that these types of models have a stable steady state. In GEM, a term is added to the exchange rate equity to force NFA and the current account to return to baseline in the long run in the absence of any change in any country or region’s ration of public debt to GDP.
For simplicity, the simulation assumes that the long-standing trend toward higher production efficiency is not yet reflect in the behavior of households and corporations—this assumption would tend to exaggerate the positive GDP effects in the scenario.