This document summarizes a report on the economic impacts of the shale gas and tight oil boom in the United States. It finds that while the boom has increased oil and gas production and employment, some states have become more economically reliant on the energy industry and vulnerable to price declines. A 25% increase in oil prices would lead to over 550,000 job losses nationwide but benefit states like North Dakota, Oklahoma and Wyoming that have significant fossil fuel industries. However, these states' economies could be hurt substantially if prices decline sharply as they did in the 1980s. The boom has made some states less economically diversified, leaving them vulnerable to volatility in energy markets.
A study released by the analysts at consulting firm Deloitte that looks at the top issues facing the oil and gas sector. The study finds that within the next 5-6 years surging shale oil and natural gas production in the U.S. will "cut deeply" into OPEC's influence on setting world oil prices.
Since 1952, the review’s mission has always been to provide objective, global data on energy markets to inform discussion, debate and decision-making. This first snap-shot of the global energy picture in 2013 – together with the historical data that puts today’s information into context – can help us to understand how the world around us is changing.
Quarterly analyst themes of oil and gas earningsEY
As it almost always is, oil and gas profitability was driven by crude oil, refined product and natural gas market conditions in Q2 2019. Oil prices seesawed, rising steadily during the first half of the quarter, falling during most of the second half of the quarter, before rising again at the end.
EY Price Point: global oil and gas market outlookEY
We enter 2021 on a note of cautious optimism for global health, the world economy, and the oil and gas markets. The first weeks of December brought approval in the US and the UK of the first of several COVID-19 vaccines. The speed with which vaccine development occurred is unprecedented, but certainly welcome. In the weeks following the early November announcement of 90+% effectiveness by the manufacturer of the first approved vaccine, the price of WTI crude oil increased by US$10/bbl to US$48/bbl, the highest level since early March. Sustainability hasn’t returned yet, and whatever time it takes to get the world to normal, it will take even longer for normalization within the oil and gas markets. Inventories remain at historically high levels and, optimistically, it will take until April before inventory returns to levels observed in the preceding five years. That’s an estimate, and there has obviously been some difficulty properly calibrating the expectations of how balance will return and how long it will take. In late November, OPEC met to adjust its output plans because of the anemic rebound in demand. In mid-December, the IEA lowered its demand forecast for 2021 due mostly to continued sluggishness in aviation fuel demand.
A mild winter has interrupted a recovery in North American natural gas prices after a run-up motivated by curtailed capital expenditures, upstream activity and production. After an initial meltdown, with cargo cancellations and dramatic price reversal, LNG markets have made a remarkable comeback, and the spread between Asia and Henry Hub has reached a level we haven’t seen in almost three years. It may be the case that interruption in FIDs has brought us to the cusp of a balance that can support reliable returns.
A study released by the analysts at consulting firm Deloitte that looks at the top issues facing the oil and gas sector. The study finds that within the next 5-6 years surging shale oil and natural gas production in the U.S. will "cut deeply" into OPEC's influence on setting world oil prices.
Since 1952, the review’s mission has always been to provide objective, global data on energy markets to inform discussion, debate and decision-making. This first snap-shot of the global energy picture in 2013 – together with the historical data that puts today’s information into context – can help us to understand how the world around us is changing.
Quarterly analyst themes of oil and gas earningsEY
As it almost always is, oil and gas profitability was driven by crude oil, refined product and natural gas market conditions in Q2 2019. Oil prices seesawed, rising steadily during the first half of the quarter, falling during most of the second half of the quarter, before rising again at the end.
EY Price Point: global oil and gas market outlookEY
We enter 2021 on a note of cautious optimism for global health, the world economy, and the oil and gas markets. The first weeks of December brought approval in the US and the UK of the first of several COVID-19 vaccines. The speed with which vaccine development occurred is unprecedented, but certainly welcome. In the weeks following the early November announcement of 90+% effectiveness by the manufacturer of the first approved vaccine, the price of WTI crude oil increased by US$10/bbl to US$48/bbl, the highest level since early March. Sustainability hasn’t returned yet, and whatever time it takes to get the world to normal, it will take even longer for normalization within the oil and gas markets. Inventories remain at historically high levels and, optimistically, it will take until April before inventory returns to levels observed in the preceding five years. That’s an estimate, and there has obviously been some difficulty properly calibrating the expectations of how balance will return and how long it will take. In late November, OPEC met to adjust its output plans because of the anemic rebound in demand. In mid-December, the IEA lowered its demand forecast for 2021 due mostly to continued sluggishness in aviation fuel demand.
A mild winter has interrupted a recovery in North American natural gas prices after a run-up motivated by curtailed capital expenditures, upstream activity and production. After an initial meltdown, with cargo cancellations and dramatic price reversal, LNG markets have made a remarkable comeback, and the spread between Asia and Henry Hub has reached a level we haven’t seen in almost three years. It may be the case that interruption in FIDs has brought us to the cusp of a balance that can support reliable returns.
European Central Bank head Mario Draghi said that "growth is too low everywhere" in the
19-country eurozone despite a modest recovery. Draghi made the blunt remark as he opened a
conference on the unemployment problem plaguing several of the European Union member
countries that share the euro currency.
EY Price Point: global oil and gas market outlookEY
As the last quarter of the second pandemic year draws to a close, we continue to see heightened contrast
between the medical and economic points of view. While COVID-19 cases are close to their all-time highs, so
are equity prices, and a leading investment bank declared (on 2 December, 2021 after the Omicron outbreak in South Africa) that it was “optimistic about the possibility of a vibrant 2022.” When news of the variant hit in
late November, the markets were rocked by the prospect of yet another round of local mobility restrictions and
an interrupted return to normal international travel patterns, on top of the Biden Administration’s announced
release of 50 million barrels of crude from the US Strategic Petroleum Reserve. So far though, with OPEC
standing by its planned gradual return to normal production, oil prices have stabilized, albeit below where they
were in mid-November. Henry Hub prices, always at the mercy of the weather, responded predictably to a
warmer-than-normal early winter in the US, falling from US$6.60/MMBtu in early October to below
US$4.00/MMBtu by mid-December. In Europe and Asia, following a short reprieve at the start of the quarter,
piped natural gas prices have spiked again on concerns triggered by Russian troop buildups on the Ukraine
border and uncertainties surrounding the Nordstream 2 pipeline. Looking forward, OPEC and the U.S. Energy
Information Administration (EIA) in their last forecasts of the year both projected that 2022 oil demand would
be above what we saw in 2019. Although time will tell if those forecasts are realized and other events could
intervene, the response to new virus outbreaks is well-practiced and the trade-off between public health and
economic reality has tipped toward a cautiously optimistic view.
Report: Benefits of Natural Gas Production & Exports for US Small BusinessesMarcellus Drilling News
A new report issued by the Small Business & Entrepreneurship Council which looks at the period 2005-2010 and the rocket growth in jobs and new small businesses created by shale drilling in states like OH, PA and WV--three of the ten states highlighted in the report. It also looks forward to the opportunity for small businesses should the U.S. start to export natural gas.
Mercer Capital's Value Focus: Auto Dealer Industry | Mid-Year 2015Mercer Capital
Mercer Capital's Auto Dealer Industry newsletter provides perspective on valuation issues. Each newsletter also includes a macroeconomic trends, industry trends, and guideline public company metrics.
EY Price Point: global oil and gas market outlook, Q2 April 2021EY
The theme for this quarter is governed. Apparent market balance at prices that could be sustainable is the product of calculated choices by market leaders and the cooperation of those who follow them. Economics played their customary role as well, with capital scarcity in North America taking about 2 million barrels per day out of the market, about half of the remaining gap in demand. While inventories are close to their pre-COVID-19 levels, there is still uncertainty. The resolution of the pandemic is in sight, but timing is unclear. Vaccine distribution in the US is having an impact but Europe is struggling to contain a third wave of infections. The taps have opened on economic stimulus, but it remains to be seen if policymakers have done enough or if they have overshot the mark.
The shape of the crude oil forward curve has fundamentally changed since the end of the last quarter. In late December of last year, the Brent forward curve was gradually increasing while today, the curve is backwardated. This is a clear sign that the market sees a short-term dynamic that is disconnected from the medium-to-long-term fundamentals. The lasting impact of the COVID-19 pandemic remains to be seen. While many have opined that COVID-19 marks a turning point in energy transition, the IEA recently released a five-year forecast of oil demand that shows steady growth, albeit at rates that are below historical expectations.
Gas markets are a paradox. At the Henry Hub and at LNG destinations, demand grows, investment lags and prices will occasionally attract attention. Traders, so far though, are unconvinced and futures prices don’t indicate imminent scarcity at any link in the value chain.
EY Price Point: global oil and gas market outlook, Q319EY
The theme for this quarter is consistency: in the significant trends impacting prices, at least. The forces that impacted oil prices in the second quarter were the same as those that have impacted prices quarter after quarter for the past several years. Surging North American production counterbalanced by OPEC+ production cuts has kept prices in a fairly narrow range. The market has become remarkably resilient. For some time now, long-dated oil futures have traded at a price very close to the market’s view of the break-even price of unconventional oil in North America.
API Report: Oil and Natural Gas Stimulate American Economic and Job GrowthMarcellus Drilling News
A report from the American Petroleum Institute that shows the incredible number of jobs and resulting economic growth that comes from shale drilling in the U.S. The study keys in on the role of "supply chain" companies--companies that sell good and services to the drilling industry.
EY Price Point: global oil and gas market outlook (Q4, October 2020)EY
Oil and gas prices have recovered steadily from their lows and are relatively stable, but that stability is supported by the combination of purposeful withholding of production by oil-producing countries and economic stress on upstream independents. Oil prices closed the quarter roughly where they started it, while refining spreads were down slightly. LNG spreads were substantially higher at the end of Q3 than they were at the beginning of the quarter but are still roughly half of what is generally thought of as sustainable.
Going forward, the market will be looking closely at how the economy and demand respond to new developments with respect to a potential COVID-19 vaccine and the US election.
EY Price Point: Global oil and gas market outlook - 1Q19EY
The theme for this quarter is reversal. Following a period of sustained growth throughout the first 10 months of 2018, the oil price recovery began to reverse in the fourth quarter.
Mercer Capital's Value Focus: Auto Dealer Industry | Year-End 2014Mercer Capital
Mercer Capital's Auto Dealer Industry newsletter provides perspective on valuation issues. Each newsletter also includes a macroeconomic trends, industry trends, and guideline public company metrics.
Mercer Capital's Value Focus: Auto Dealer Industry | Mid-Year 2014Mercer Capital
Mercer Capital's Auto Dealer Industry newsletter provides perspective on valuation issues. Each newsletter also includes a macroeconomic trends, industry trends, and guideline public company metrics.
VF: Exploration and Production: Q4 2018 | Region Focus: AppalachiaMercer Capital
Mercer Capital's Energy Industry newsletter provides perspective on valuation issues. Each newsletter also typically includes macroeconomic trends, industry trends, and guideline public company metrics.
A new white paper issued by consulting firm Deloitte titled, "America's newfound power: What the U.S. should do to capitalize on the shale and renewable energy revolutions". The paper makes the case that the U.S. shale revolution is not an end but mearly a means to an end--a renewal energy future. Written by Joseph Stanislaw.
Mercer Capital's Value Focus: Energy Industry | Q3 2021 | Segment: BakkenMercer Capital
Mercer Capital's Energy Industry newsletter provides perspective on valuation issues. Each newsletter also typically includes a macroeconomic trends, industry trends, and guideline public company metrics.
EY Price Point: global oil and gas market outlookEY
As we close the second quarter of 2020, in most of Europe and Asia, the first (and hopefully last) wave of the COVID-19 crisis appears to be abating. In the parts of the US where the virus hit early, the profile has largely matched Europe’s, while in other parts, the urge to reopen businesses has trumped the desire to contain the virus and uncertainty looms. In the developing world, the crisis has just begun, but without the economic headroom and resources necessary to contain it. As the crisis unfolded, the effect on oil and gas demand has been predictable but difficult to gauge precisely and therefore difficult to manage.
Oil prices have crept up steadily as production has been curtailed through coordinated action (OPEC+) and because of economic reality (unconventional oil in North America). That trend has been subject to momentary spasms when bad news hit the market. It would be understandable if traders were nervous, and it seems that they are. Although nowhere near where it was at the peak of the crisis, option implied volatility is still at historically high levels. Gas markets, without the benefit of coordination on the supply side, continue to deal with the market implications of storage at or near capacity. Interfuel competition in power generation has always provided something of a floor, but those lows have been, and will continue to be, tested.
EY Price Point: Global Oil and Gas Market Outlook - Q3EY
The oil and gas sector is constantly changing. Increasingly uncertain energy policies, geopolitical complexities, cost management and climate change all present significant challenges. EY’s Global Oil & Gas Sector supports a global network of more than 10,000 oil and gas professionals with extensive experience in providing assurance, tax, transaction and advisory services across the upstream, midstream, downstream and oil field sub-sectors.
In 2019, we saw evidence of the impact of economic headwinds on overall mergers and acquisitions (M&A) activity, with global deal value declining 33% from Q4 2018 to US$20.6b. Deal value increased in the renewables and water and wastewater segments quarter on quarter while decreasing in the remaining segments.
EY Price Point: global oil and gas market outlook, Q2 | April 2022EY
The theme for this quarter is rearrangement. The loss, or potential loss, of Russian oil and gas supplies is forcing producers, refiners and traders to rethink the flow of crude oil and refined products from the wellhead to the gas pump in light of sanctions, potential sanctions and the risk of reputational damage. Countries, companies and consumers will all be searching for ways to adapt, and the outcome of the race to bring alternatives to market could alter the global energy landscape for years to come.
It is likely crude oil and LNG prices will remain elevated for some time. The process of diverting Russian oil through countries unwilling to sanction it will take time and there is little indication OPEC members are willing (or able) to increase production to make up for the loss of Russian crude. Spare capacity sat at 3.7 mbpd at the end of 2021, just above where it was in January 2020. Currently, sanctioned Venezuelan and Iranian production (about 3 mbpd below their peak) could fill the gap, but political and commercial obstacles remain. At today’s prices, US shale production is attractive, but the fastest the industry has been able to grow is between 1mbpd and 2mbpd per year. The LNG infrastructure was already stretched before the war in Ukraine and there is little prosect of finding new supplies soon.
As the largest buyer of Russian energy, Europe will be the epicenter. There is a deeply embedded bias there in favor for renewable energy, and the current crisis is certain to result in an all-out effort to accelerate the build-out of wind and solar power. The capacity to add new green energy is limited though by the project pipeline and supply chains for solar panels and wind turbines, and it is likely that much of the shortfall will be made up with the new LNG infrastructure.
The global high yield bond markets have witnessed sentiment to risk-off mode. This has since been partially significant growth and diversification over the last few years aided by the extraordinary monetary policy accommodation provided by central banks across the world. The unprecedented liquidity made available at record low yields has thus led to a significant pick up in both primary market and secondary market activity in the asset class. Banking disintermediation in Europe and regulatory changes in the financial sector further contributed to the deepening and diversification of the high yield bond markets even as emerging market issuances entered the fray.
In this backdrop, Aranca’s special report – High Yield Bonds - The Rise of the Fallen – examines how liquidity concerns have increased with changing regulatory environment, rising capital requirements and declining risk appetite leading to decreasing bond inventories at both banks and other dealers even as corporate bond issuances are at an all-time high.
European Central Bank head Mario Draghi said that "growth is too low everywhere" in the
19-country eurozone despite a modest recovery. Draghi made the blunt remark as he opened a
conference on the unemployment problem plaguing several of the European Union member
countries that share the euro currency.
EY Price Point: global oil and gas market outlookEY
As the last quarter of the second pandemic year draws to a close, we continue to see heightened contrast
between the medical and economic points of view. While COVID-19 cases are close to their all-time highs, so
are equity prices, and a leading investment bank declared (on 2 December, 2021 after the Omicron outbreak in South Africa) that it was “optimistic about the possibility of a vibrant 2022.” When news of the variant hit in
late November, the markets were rocked by the prospect of yet another round of local mobility restrictions and
an interrupted return to normal international travel patterns, on top of the Biden Administration’s announced
release of 50 million barrels of crude from the US Strategic Petroleum Reserve. So far though, with OPEC
standing by its planned gradual return to normal production, oil prices have stabilized, albeit below where they
were in mid-November. Henry Hub prices, always at the mercy of the weather, responded predictably to a
warmer-than-normal early winter in the US, falling from US$6.60/MMBtu in early October to below
US$4.00/MMBtu by mid-December. In Europe and Asia, following a short reprieve at the start of the quarter,
piped natural gas prices have spiked again on concerns triggered by Russian troop buildups on the Ukraine
border and uncertainties surrounding the Nordstream 2 pipeline. Looking forward, OPEC and the U.S. Energy
Information Administration (EIA) in their last forecasts of the year both projected that 2022 oil demand would
be above what we saw in 2019. Although time will tell if those forecasts are realized and other events could
intervene, the response to new virus outbreaks is well-practiced and the trade-off between public health and
economic reality has tipped toward a cautiously optimistic view.
Report: Benefits of Natural Gas Production & Exports for US Small BusinessesMarcellus Drilling News
A new report issued by the Small Business & Entrepreneurship Council which looks at the period 2005-2010 and the rocket growth in jobs and new small businesses created by shale drilling in states like OH, PA and WV--three of the ten states highlighted in the report. It also looks forward to the opportunity for small businesses should the U.S. start to export natural gas.
Mercer Capital's Value Focus: Auto Dealer Industry | Mid-Year 2015Mercer Capital
Mercer Capital's Auto Dealer Industry newsletter provides perspective on valuation issues. Each newsletter also includes a macroeconomic trends, industry trends, and guideline public company metrics.
EY Price Point: global oil and gas market outlook, Q2 April 2021EY
The theme for this quarter is governed. Apparent market balance at prices that could be sustainable is the product of calculated choices by market leaders and the cooperation of those who follow them. Economics played their customary role as well, with capital scarcity in North America taking about 2 million barrels per day out of the market, about half of the remaining gap in demand. While inventories are close to their pre-COVID-19 levels, there is still uncertainty. The resolution of the pandemic is in sight, but timing is unclear. Vaccine distribution in the US is having an impact but Europe is struggling to contain a third wave of infections. The taps have opened on economic stimulus, but it remains to be seen if policymakers have done enough or if they have overshot the mark.
The shape of the crude oil forward curve has fundamentally changed since the end of the last quarter. In late December of last year, the Brent forward curve was gradually increasing while today, the curve is backwardated. This is a clear sign that the market sees a short-term dynamic that is disconnected from the medium-to-long-term fundamentals. The lasting impact of the COVID-19 pandemic remains to be seen. While many have opined that COVID-19 marks a turning point in energy transition, the IEA recently released a five-year forecast of oil demand that shows steady growth, albeit at rates that are below historical expectations.
Gas markets are a paradox. At the Henry Hub and at LNG destinations, demand grows, investment lags and prices will occasionally attract attention. Traders, so far though, are unconvinced and futures prices don’t indicate imminent scarcity at any link in the value chain.
EY Price Point: global oil and gas market outlook, Q319EY
The theme for this quarter is consistency: in the significant trends impacting prices, at least. The forces that impacted oil prices in the second quarter were the same as those that have impacted prices quarter after quarter for the past several years. Surging North American production counterbalanced by OPEC+ production cuts has kept prices in a fairly narrow range. The market has become remarkably resilient. For some time now, long-dated oil futures have traded at a price very close to the market’s view of the break-even price of unconventional oil in North America.
API Report: Oil and Natural Gas Stimulate American Economic and Job GrowthMarcellus Drilling News
A report from the American Petroleum Institute that shows the incredible number of jobs and resulting economic growth that comes from shale drilling in the U.S. The study keys in on the role of "supply chain" companies--companies that sell good and services to the drilling industry.
EY Price Point: global oil and gas market outlook (Q4, October 2020)EY
Oil and gas prices have recovered steadily from their lows and are relatively stable, but that stability is supported by the combination of purposeful withholding of production by oil-producing countries and economic stress on upstream independents. Oil prices closed the quarter roughly where they started it, while refining spreads were down slightly. LNG spreads were substantially higher at the end of Q3 than they were at the beginning of the quarter but are still roughly half of what is generally thought of as sustainable.
Going forward, the market will be looking closely at how the economy and demand respond to new developments with respect to a potential COVID-19 vaccine and the US election.
EY Price Point: Global oil and gas market outlook - 1Q19EY
The theme for this quarter is reversal. Following a period of sustained growth throughout the first 10 months of 2018, the oil price recovery began to reverse in the fourth quarter.
Mercer Capital's Value Focus: Auto Dealer Industry | Year-End 2014Mercer Capital
Mercer Capital's Auto Dealer Industry newsletter provides perspective on valuation issues. Each newsletter also includes a macroeconomic trends, industry trends, and guideline public company metrics.
Mercer Capital's Value Focus: Auto Dealer Industry | Mid-Year 2014Mercer Capital
Mercer Capital's Auto Dealer Industry newsletter provides perspective on valuation issues. Each newsletter also includes a macroeconomic trends, industry trends, and guideline public company metrics.
VF: Exploration and Production: Q4 2018 | Region Focus: AppalachiaMercer Capital
Mercer Capital's Energy Industry newsletter provides perspective on valuation issues. Each newsletter also typically includes macroeconomic trends, industry trends, and guideline public company metrics.
A new white paper issued by consulting firm Deloitte titled, "America's newfound power: What the U.S. should do to capitalize on the shale and renewable energy revolutions". The paper makes the case that the U.S. shale revolution is not an end but mearly a means to an end--a renewal energy future. Written by Joseph Stanislaw.
Mercer Capital's Value Focus: Energy Industry | Q3 2021 | Segment: BakkenMercer Capital
Mercer Capital's Energy Industry newsletter provides perspective on valuation issues. Each newsletter also typically includes a macroeconomic trends, industry trends, and guideline public company metrics.
EY Price Point: global oil and gas market outlookEY
As we close the second quarter of 2020, in most of Europe and Asia, the first (and hopefully last) wave of the COVID-19 crisis appears to be abating. In the parts of the US where the virus hit early, the profile has largely matched Europe’s, while in other parts, the urge to reopen businesses has trumped the desire to contain the virus and uncertainty looms. In the developing world, the crisis has just begun, but without the economic headroom and resources necessary to contain it. As the crisis unfolded, the effect on oil and gas demand has been predictable but difficult to gauge precisely and therefore difficult to manage.
Oil prices have crept up steadily as production has been curtailed through coordinated action (OPEC+) and because of economic reality (unconventional oil in North America). That trend has been subject to momentary spasms when bad news hit the market. It would be understandable if traders were nervous, and it seems that they are. Although nowhere near where it was at the peak of the crisis, option implied volatility is still at historically high levels. Gas markets, without the benefit of coordination on the supply side, continue to deal with the market implications of storage at or near capacity. Interfuel competition in power generation has always provided something of a floor, but those lows have been, and will continue to be, tested.
EY Price Point: Global Oil and Gas Market Outlook - Q3EY
The oil and gas sector is constantly changing. Increasingly uncertain energy policies, geopolitical complexities, cost management and climate change all present significant challenges. EY’s Global Oil & Gas Sector supports a global network of more than 10,000 oil and gas professionals with extensive experience in providing assurance, tax, transaction and advisory services across the upstream, midstream, downstream and oil field sub-sectors.
In 2019, we saw evidence of the impact of economic headwinds on overall mergers and acquisitions (M&A) activity, with global deal value declining 33% from Q4 2018 to US$20.6b. Deal value increased in the renewables and water and wastewater segments quarter on quarter while decreasing in the remaining segments.
EY Price Point: global oil and gas market outlook, Q2 | April 2022EY
The theme for this quarter is rearrangement. The loss, or potential loss, of Russian oil and gas supplies is forcing producers, refiners and traders to rethink the flow of crude oil and refined products from the wellhead to the gas pump in light of sanctions, potential sanctions and the risk of reputational damage. Countries, companies and consumers will all be searching for ways to adapt, and the outcome of the race to bring alternatives to market could alter the global energy landscape for years to come.
It is likely crude oil and LNG prices will remain elevated for some time. The process of diverting Russian oil through countries unwilling to sanction it will take time and there is little indication OPEC members are willing (or able) to increase production to make up for the loss of Russian crude. Spare capacity sat at 3.7 mbpd at the end of 2021, just above where it was in January 2020. Currently, sanctioned Venezuelan and Iranian production (about 3 mbpd below their peak) could fill the gap, but political and commercial obstacles remain. At today’s prices, US shale production is attractive, but the fastest the industry has been able to grow is between 1mbpd and 2mbpd per year. The LNG infrastructure was already stretched before the war in Ukraine and there is little prosect of finding new supplies soon.
As the largest buyer of Russian energy, Europe will be the epicenter. There is a deeply embedded bias there in favor for renewable energy, and the current crisis is certain to result in an all-out effort to accelerate the build-out of wind and solar power. The capacity to add new green energy is limited though by the project pipeline and supply chains for solar panels and wind turbines, and it is likely that much of the shortfall will be made up with the new LNG infrastructure.
The global high yield bond markets have witnessed sentiment to risk-off mode. This has since been partially significant growth and diversification over the last few years aided by the extraordinary monetary policy accommodation provided by central banks across the world. The unprecedented liquidity made available at record low yields has thus led to a significant pick up in both primary market and secondary market activity in the asset class. Banking disintermediation in Europe and regulatory changes in the financial sector further contributed to the deepening and diversification of the high yield bond markets even as emerging market issuances entered the fray.
In this backdrop, Aranca’s special report – High Yield Bonds - The Rise of the Fallen – examines how liquidity concerns have increased with changing regulatory environment, rising capital requirements and declining risk appetite leading to decreasing bond inventories at both banks and other dealers even as corporate bond issuances are at an all-time high.
The latest annual energy risk report issued by the U.S. Chamber of Commerce. The report shows the U.S. has jumped up the list by two spots in the world's top 25 largest energy users. The jump up the list means the U.S. continues to improve its energy security.
AmeraTex Energy | The American Oil & Gas Industry Is Rescuing The Obama EconomyAmeraTex Energy Inc
On average, weekly wages have increased 40 percent since 2009. With a 3.3 percent unemployment rate statewide, North Dakota is attracting new residents in droves, and the state’s construction, financial, insurance and real estate sectors all grew significantly in the last year.
A summary of the climate change protection movement in the U.S. and action needed to further reduce greenhouse gasses and create a clean energy future. Progress has been inadequate. The war against the climate change crisis demands higher priority and more urgent attention by U.S. policy makers, law makers, the business community and citizens.
An issue brief/report from the Manhattan Institute. The 20-page report says now is the time for the U.S. to press its advantage in shale energy. The report's writer, senior fellow at the Manhattan Institute, Oren Cass, points out the cyclical nature of commodity prices for oil and gas and says even though prices are down now--they won't stay that way. In order to take full advantage of the shale boom, Cass suggests 11 reforms to help craft a smarter U.S. energy policy--one that will amplify the current boom and extend it far into the future.
A study released by the analysts at consulting firm Deloitte that looks at the top issues facing the oil and gas sector. The study finds that within the next 5-6 years surging shale oil and natural gas production in the U.S. will "cut deeply" into OPEC's influence on setting world oil prices.
CRS: U.S. Crude Oil and Natural Gas Production in Federal and Non-Federal AreasMarcellus Drilling News
A report issued on Feb. 28, 2013 by the Congressional Research Service, a branch of the U.S. Congress. The report shows that while oil and natural gas production on private land in the U.S. rose from 2007-2012, production decreased, significantly, on federal lands during the same period. Obama administration policies are partially to blame for the decrease in federal land production.
ACCF Letter to DOE Sec. Ernest Moniz Requesting Expedited Approval of LNG Exp...Marcellus Drilling News
A letter from the American Council for Capital Formation to Dept. of Energy Sec. Ernest Moniz making the case for more liquefied natural gas (LNG) exports. The DOE under Moniz is charged with approving exports of energy to countries with no free trade agreement with the U.S. They have approved 5 such facilities, but another 21 permits have been filed. Anti-drillers don't want more exports. ACCF provides Moniz with compelling reasons to push forward, quickly, with approvals for more of the LNG export facilities.
Iraq's Impact on Oil Markets, ASX Listed Energy Producer plus S&P500 OpportunityInvast Financial Services
During this week's Invast Insights we cover:
► The impact of Iraq on oil markets
► The depression in mining won’t last forever
► Australian listed energy producer
► S&P500 looks like a good short
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MARINET – National Technology Initiative (NTI) is a key long-term program of the public-private partnership in the development of promising new markets based on high-tech solutions that will determine development of the global and Russian economy in the next 15-20 years.
MARINET was established in 2015 and involves a wide range of organizations providing advanced technologies for the maritime industry – from the leading corporations and universities to startup companies and research teams. Currently it joins several hundreds representatives from technology companies, leading universities, research and scientific centers, development institutions, business associations, ministries and government agencies.
GDG Cloud Southlake #33: Boule & Rebala: Effective AppSec in SDLC using Deplo...James Anderson
Effective Application Security in Software Delivery lifecycle using Deployment Firewall and DBOM
The modern software delivery process (or the CI/CD process) includes many tools, distributed teams, open-source code, and cloud platforms. Constant focus on speed to release software to market, along with the traditional slow and manual security checks has caused gaps in continuous security as an important piece in the software supply chain. Today organizations feel more susceptible to external and internal cyber threats due to the vast attack surface in their applications supply chain and the lack of end-to-end governance and risk management.
The software team must secure its software delivery process to avoid vulnerability and security breaches. This needs to be achieved with existing tool chains and without extensive rework of the delivery processes. This talk will present strategies and techniques for providing visibility into the true risk of the existing vulnerabilities, preventing the introduction of security issues in the software, resolving vulnerabilities in production environments quickly, and capturing the deployment bill of materials (DBOM).
Speakers:
Bob Boule
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Energy Brief Oil Shale
1. ENERGY BRIEF
The Shale Gas and Tight Oil
Boom: U.S. States’ Economic
Gains and Vulnerabilities
Stephen P.A. Brown and Mine K. Yücel
October 2013
This brief is made possible through the generous support of the Alfred P. Sloan
Foundation.
3. 1
INTRODUCTION
U.S. policymakers have been concerned about the country’s dependence on imported energy since
World War II. Those concerns were highlighted in the 1970s when episodes of sharply rising oil prices
led to recessions, economic stagnation, and high inflation. However, recent gains in U.S. oil and natural
gas production are changing the dialogue about U.S. energy strengths and vulnerabilities.
The “shale revolution” has stimulated tremendous production of oil and natural gas in the United
States. The revolution is the product of advances in oil and natural gas production technology—
notably, a new combination of horizontal drilling and hydraulic fracturing. These technological ad-vances
combined with high oil and gas prices have enabled increased production of the abundant oil
and natural gas resources in the United States.
Greater availability of domestic energy resources benefits the United States by reducing dependence
on imported energy and diversifying the economy.1 But the boom also brings new vulnerabilities. Ex-amining
how changes in U.S. oil and natural gas production may affect individual state economies
shows that some of the states providing new energy resources are becoming less economically diversi-fied
and more economically vulnerable to energy price declines.
O I L PRI C E S AND EMPLOYMENT IN THE U . S . F O S S I L F U E L I NDUSTRY
Until recently, the U.S. oil and natural gas industry mostly followed the ups and downs of world oil
prices, but with a long-term decline that reflected the decreasing availability of U.S. oil and natural gas
resources. At the height of the early 1980s oil boom, the five industries most sensitive to oil prices—
coal mining, oil and gas extraction, oil field machinery, petroleum refining, and petrochemicals—
accounted for 1.6 million jobs, 1.8 percent of total U.S. nonagricultural employment.2 By 2000, the
share of these five industries had dwindled to 0.4 percent of total U.S. nonagricultural employment,
only 457,000 jobs. With oil and natural gas prices rising beginning in the early 2000s, employment in
the oil and natural gas sector began growing too. The boom in production of oil and natural gas from
shale formations became a significant factor after 2008. Figure 1 shows that rising energy prices and
the shale boom led to strong growth of U.S. oil and gas employment from 2005 to 2011.
4. 2
Figure 1. U.S. Fossil Fuel–Related Employment
Sources: U.S. Bureau of Labor Statistics; author calculations.
Despite recent gains, however, the fossil fuel industry has a smaller share of U.S. employment than it
did in the early 1980s, and the industry’s share of national economic activity is relatively small. After
the end of the recession, between 2010 and the end of 2012, the industry added 169,000 jobs nation-wide,
growing at a rate about ten times that of overall U.S. employment. The industry’s output shares
follow a similar path. The share of oil and gas extraction was 4.3 percent of U.S. gross domestic prod-uct
(GDP) at its height in 1981, but declined to 0.6 percent by 1999. The share of oil and gas rose to 1.6
percent of GDP in 2011 as a result of the shale boom.3
FOSSI L F U E L I NDUSTRI E S A N D S T A T E EMP LOYMENT
As energy prices and U.S. oil and natural gas production fell from the mid-1980s to the early 2000s,
most U.S. energy-producing states diversified away from energy production and energy-intensive in-dustries.
In 1982, the states with the greatest concentration of energy-related industries were West Vir-ginia,
Wyoming, Delaware, Oklahoma, Louisiana, and Texas.4 Oil and natural gas accounted for much
of the activity except in Delaware, which had a high concentration of the petrochemical industry, and in
West Virginia, the heart of coal country. Shares of energy-related employment ranged from 7.3 percent
in Texas to 13.7 percent in West Virginia. By 2000, these shares had declined to a range from 2.5 per-cent
to 7.4 percent.
Rising oil and gas prices since the early 2000s prompted a resurgence of energy employment. In-creased
use of horizontal drilling and hydraulic fracturing led to further gains in oil and gas hiring. As of
2011, the states with the highest shares of energy employment were Alaska, Louisiana, New Mexico,
North Dakota, Oklahoma, Texas, West Virginia, and Wyoming. As shown in Figure 2, energy em-ployment
shares increased in all eight of these states from 2000 to 2011.5 Although there is little oil and
gas activity in West Virginia, its coal production grew because coal prices followed the upward trend in
oil prices in the 2000s. Despite these gains, however, almost every one of these states depends less on
the five main energy-related industries than they did in 1982.
5. 3
Figure 2. State Employment Shares
Sources: Author calculations with data from the U.S. Bureau of Labor Statistics.
Fossil fuel production has been important to these states’ recent economic performance. Since the early
days of the shale boom in 2006, the four states with the highest rates of employment growth are the
states with the highest shares of oil and gas employment (Figure 3). The greatest growth has been in
Texas and North Dakota, states with production from shale and the largest production increases. As
seen in Figure 3, between 2006 and 2012, U.S. employment declined 0.05 percent per year on average,
while employment in North Dakota and Texas grew by 3.4 and 1.5 percent, respectively, the fastest
growth in the country.
Figure 3. Shale Oil and Employment Growth
Note: 2006–2012 yearly employment growth rates; U.S. average annual employment growth of -0.05.
Sources: Author calculations; data from U.S. Bureau of Labor Statistics; U.S. Energy Information Administration.
6. 4
O I L P R I C E S HOCKS A N D REGIONAL E CONOMI C ACTIV ITY
Because the United States is an oil importer, its economy has been hurt by previous episodes of sharply
rising oil prices that resulted from oil supply shocks.6 Given the oil production increase in the past cou-ple
of years, has the response of the U.S. economy to oil price shocks changed? The economic composi-tion
of individual states affects their responses to oil price shocks. We find that the economies of forty-two
states and the District of Columbia would suffer if oil prices rise. In contrast, the economies of
eight states—Alaska, Louisiana, New Mexico, North Dakota, Oklahoma, Texas, West Virginia, and
Wyoming—would benefit from such increases.
To assess the effects of oil price shocks on states’ economies, we first estimate the responses of indi-vidual
industries to changes in oil prices using methods we used in a 1995 paper.7 As shown in Table 1,
the estimated price elasticity of total U.S. employment, based on data for 2000–2011, is -0.02, which
means that a 10 percent increase in oil prices reduces U.S. employment by 0.2 percent.8 Employment
in the fossil fuel industries is considerably more responsive to oil price movements than employment in
the overall economy is, but the responsiveness is less than we estimated eighteen years ago.9 These dif-ferences
are the result of changing relationships between the industries, such as the reduced sensitivity
of coal and natural gas prices to oil prices, the closure of some U.S. refineries, and how relative changes
in oil and natural gas prices affect the U.S. petrochemicals industry.
Table 1. Elasticities of Employment With Respect to Oil Prices10
Elasticity
Total U.S. Employment -0.02
Coal Mining 0.24
Oil and Natural Gas Extraction 0.40
Oil Field Machinery 0.29
Refining -0.03
Petrochemicals 0.36
Sources: Author calculations.
To calculate the employment response of each state to an oil price shock, we combine these elasticities
with the input-output analysis framework we previously developed and published in 1995 (updated
with new multipliers).11 The framework takes into account the composition of each state’s economy,
quantitative differences in multiplier effects across states, and the response of individual fossil fuel in-dustries
to changes in oil prices. Differences across the states in concentrations of energy-producing
and energy-consuming industries account for most of the variation in the response of employment to
oil price changes across the states. Differences in multiplier effects also account for some of the varia-tion
between states.12
The results show that a 25 percent increase in oil prices (for example from $100 to $125) would re-sult
in a loss of more than 550,000 jobs nationwide.13 None of the states stand out as being hurt by ris-ing
oil prices by much more than the country as whole (Table 2). Several states without much of an oil
and gas industry would see somewhat stronger negative effects from rising oil prices than the country
as a whole.
7. 5
Table 2. Estimated Employment Response to a 25 Percent Increase in Crude Oil Prices, 2012
Percent Percent
United States -0.43
Wisconsin -0.74 Ohio -0.61
Minnesota -0.73 Missouri -0.60
Tennessee -0.72 Illinois -0.59
Rhode Island -0.71 Massachusetts -0.59
Florida -0.71 Delaware -0.58
New Hampshire -0.70 South Dakota -0.57
Idaho -0.69 New York -0.57
Nevada -0.69 California -0.56
Arizona -0.68 Alabama -0.56
Indiana -0.68 District of Columbia -0.50
Nebraska -0.67 Kentucky -0.48
Vermont -0.66 Pennsylvania -0.47
Iowa -0.66 Utah -0.38
New Jersey -0.65 Kansas -0.35
Washington -0.64 Mississippi -0.35
Maryland -0.64 Arkansas -0.34
Georgia -0.64 Montana -0.31
Michigan -0.64 Colorado -0.15
Virginia -0.64 New Mexico 0.36
South Carolina -0.64 West Virginia 0.36
Oregon -0.64 Texas 0.60
Connecticut -0.63 Louisiana 0.78
Maine -0.62 Alaska 0.87
North Carolina -0.62 North Dakota 1.01
Hawaii -0.61 Oklahoma 1.16
Wyoming 2.14
Sources: Author calculations; data from U.S. Bureau of Labor Statistics and the Wall Street Journal.
8. 6
Figure 4. Estimated Employment Response to a 25 Percent Increase in Crude Oil Prices, 2012
Sources: Author calculations; data from U.S. Bureau of Labor Statistics and the Wall Street Journal.
Several states with larger fossil fuel industries see positive effects or a smaller negative effect than the
country as a whole. Alaska, Louisiana, New Mexico, North Dakota, Oklahoma, Texas, West Virginia,
and Wyoming would benefit from rising oil prices. Combined, these eight states would add around a
hundred thousand jobs in response to a 25 percent rise in oil prices.
Wyoming would benefit most from an oil price spike because it has a small population and a large
share of oil and gas extraction employment. Alaska’s economy has traditionally depended on the oil
extraction industry, has the second highest share of extraction employment among all states, and re-mains
a beneficiary of higher oil prices. North Dakota’s fossil fuel industry has grown rapidly since the
onset of the shale boom and extraction is now 4 percent of state employment. West Virginia, with a
strong coal industry, benefits from higher oil prices, but by less than what we previously estimated in
1995 for 1982 and 1992.14 Coal prices moved together more tightly with oil prices until the global re-cession.
Although coal prices have slowly trended higher during the recovery, the relationship with oil
has weakened. As long as coal prices move with those for oil, the West Virginia economy will benefit
from higher oil prices, albeit in a more muted manner than in the past.
The Louisiana and Texas economies are helped by rising oil prices, but employment response is less
than in some energy states. These two states are home to 40 percent of U.S. refining capacity, and refin-ing
is hurt by rising oil prices. In addition, Texas has a large and diverse economy: the share of oil and
gas extraction is about 2 percent of state employment, much less than in other energy-producing states.
Louisiana and Texas are also home to a substantial portion of U.S. petrochemical production. Rising
oil prices help the U.S. petrochemicals industry as long as natural gas prices remain low. If enough do-mestic
natural gas were exported such that U.S. natural gas prices again moved with oil prices, the U.S.
petrochemicals industry would no longer benefit from rising oil prices.15
These employment responses differ substantially from those we previously estimated for 1982, a year
at the height of the last U.S. oil and gas boom.16 For that year, economies of thirteen states would have
benefitted from rising oil prices. In addition to the eight states mentioned above, rising oil prices would
have aided Colorado, Kansas, Montana, Mississippi, and Utah. Over the past thirty years, the economies
in these five states have diversified away from crude oil production, and they no longer respond favorably
to rising crude oil prices. Nonetheless, the presence of sizable oil and natural gas industries in these five
states mutes their negative response to rising oil prices.
9. 7
STATE VULNERA B I L I T Y TO A D ECLI N E I N O I L PRI C E S
Increased energy prices and technological improvements were catalysts for the U.S. fossil fuel indus-try’s
turnaround. Would declining prices reverse those gains? A brief look at history is telling.
From 1972 to 1982, when oil prices increased more than tenfold, Texas economic output and em-ployment
averaged annual growth rates of 7.5 percent and 5.5 percent, respectively. When oil prices
collapsed to about eleven dollars per barrel in 1986, the Texas economy went into a deep recession for
two years. Economic output contracted 5.6 percent and employment fell 1.1 percent.
Even though oil and gas extraction accounted for 19 percent of the Texas economy in 1981, that
share was the second smallest among the eight oil-sensitive states (West Virginia was smallest). As a
percentage of state GDP, the oil and gas sector accounted for 49 percent in Alaska, 37 percent in Wy-oming,
35 percent in Louisiana, and 20 percent in North Dakota. The 1986 oil price crash also caused a
recession in most of these states, with employment declines largest in Wyoming (-5.9 percent) and
Alaska (-4.5 percent)—states with the largest oil and gas output shares. The economies of these oil-sensitive
states rebounded after 1987, but their growth rates were weaker than that of Texas.
Table 3 shows how the fossil fuel industry’s output shares contracted after the oil industry peak in
1981 and later expanded with the shale boom, especially in North Dakota, Oklahoma, and Wyoming. The
2012 shares of state GDP from oil and gas extraction should prove even higher, given that oil production
has been increasing in these states.17 If oil prices were to collapse, these states with the highest concentra-tions
in oil and gas extraction would be the hardest hit.
Table 3. Share of Oil and Gas Extraction in State GDP
Percent
1981 2000 2010
Alaska 49.5 15.1 19.1
Louisiana 35.5 11.1 9.7
New Mexico 26.1 5.2 5.1
North Dakota 20.3 0.9 4.3
Oklahoma 21.6 4.8 9.1
Texas 19.1 5.8 7.8
West Virginia 2.4 1.0 1.5
Wyoming 37.1 9.8 18.5
Source: Author calculations; data from U.S. Bureau of Economic
Analysis.
This finding is consistent with the results reported in Table 2. Applying our model in the same way for
a price decline as for a price increase shows that falling oil prices would cause overall employment loss-es
in Wyoming, Oklahoma, North Dakota, Alaska, Louisiana, Texas, West Virginia, and New Mexico,
with the greatest percentage losses in the first three.18
States like Texas and Louisiana that have downstream oil and gas industries that benefit from falling
energy prices such as refining and petrochemicals would be less affected. In addition, states in which
natural gas is more prominent than oil are likely to see less harm from falling oil prices. With the recent
weakening in the relationship between oil and natural gas prices, a decline in oil prices does not neces-sarily
imply as big a change in natural gas prices as it once did, lessening the effect of an oil price decline.
While many states have diversified away from either a heavy reliance on energy consumption or en-ergy
production, others have seen and will continue seeing an increasing dependence on energy pro-
10. 8
duction as a result of the shale revolution. Economic activity in these states is vulnerable to energy price
declines. The smaller and less diversified the state, the larger the vulnerability. This vulnerability will
increase with growing oil and natural gas production.
Yet most states that currently benefit from falling oil and gas prices will still gain from such devel-opments
even if their oil and gas production rises significantly in the coming years. For example, Cali-fornia,
Colorado, and Pennsylvania produce a considerable amount of oil and natural gas, but these
states would still gain from falling oil prices—even if their oil and gas sectors grew substantially. The
California oil and gas sector, for example, would need to be more than 9.5 times larger than it is today
for an oil price fall to hurt the California economy. Similarly, the sector would need to be more than 3.9
times larger in Pennsylvania and more than 1.3 times larger in Colorado for oil price declines to hurt
the relevant state economies.
CONCLUSION
Given that oil is priced on an international market, increased domestic oil production will not do much
to lower prices for U.S. consumers, as any gains in U.S. production will be spread across the interna-tional
market. Greater reliance on domestic oil resources in substitution for imports will reduce the
vulnerability of the economy to oil supply disruptions, although not by much.
Reduced energy use has lessened the vulnerability of the U.S. economy to oil price shocks. A similar
phenomenon is seen at the state level, with many state economies having diversified away from energy-using
industries. At the same time, the growing prominence of energy production can make states with
small, undiversified economies more susceptible to an economic downturn during an energy price de-cline.
11. 9
About the Authors
Stephen P.A. Brown is a professor of economics and the director of the Center for Business and
Economic Research at the University of Nevada, Las Vegas. An internationally recognized scholar
for his work in energy economics, Brown has conducted economic research and analysis on regional
economic growth, aggregate economic activity, economic indicators, business conditions, public
finance, energy, environment, climate policy, and economic impacts.
Mine K. Yücel is senior vice president and director of research at the Federal Reserve Bank of Dallas,
where she has worked since 1989. Yücel analyzes the regional economy and energy markets on an ongo-ing
basis and has published numerous articles on energy economics and regional growth. She has been
the president of both the International and U.S. Association of Energy Economics and has served on the
boards of numerous professional organizations.
The views expressed are those of the authors and should not be attributed to the Federal Reserve Bank
of Dallas or the Federal Reserve System.
12. 10
Endnotes
1. See Stephen P.A. Brown and Hillard G. Huntington, “Assessing the U.S. Oil Security Premium,” Energy Economics vol. 38 no. C, July
2013, pp. 118–127; and Stephen P.A. Brown and Ryan T. Kennelly, “Consequences of U.S. Dependence on Foreign Oil,” Center for
Business and Economic Research, University of Nevada, Las Vegas, 2013.
2. U.S. Bureau of Labor Statistics.
3. U.S. sectoral GDP data come out with a lag. The latest data are from 2011.
4. See Stephen P.A. Brown and Mine K. Yücel, “Energy Prices and State Economic Performance,” Economic Review, Federal Reserve
Bank of Dallas, Second Quarter, 1995.
5. Latest detailed state sectoral data are from 2011, as of this writing.
6. Lutz Kilian provides evidence that rising oil prices that result from demand shocks do not adversely affect U.S. economic activity. See
Lutz Kilian, “Not All Oil Price Shocks Are Alike: Disentangling Demand and Supply Shocks in the Crude Oil Market,” American Eco-nomic
Review vol. 9 no. 4, June 2009, pp. 1053–1069.
7. Stephen P.A. Brown and Mine K. Yücel, “Energy Prices and State Economic Performance,” Economic Review, Federal Reserve Bank
of Dallas, second quarter, 1995.
8. This estimate of the overall U.S. employment response is in the range of estimated GDP responses to oil price movements.
9. We previously estimated the oil-price elasticities of employment in coal mining, oil and natural gas extraction, oil field machinery,
refining, and petrochemicals at 0.45, 1.01, 1.23, -0.56, and -0.32. See Stephen P.A. Brown and Mine K. Yücel, “Energy Prices and State
Economic Performance,” Economic Review, Federal Reserve Bank of Dallas, second quarter, 1995.
10. The industry elasticities are obtained from regressions of sectoral employment on WTI crude oil prices, using monthly data for the
time period 2000–2011. The total U.S. employment elasticity is taken from empirical work in the economics literature. See Stephen
P.A. Brown and Mine K. Yücel, “Energy Prices and State Economic Performance,” Economic Review, Federal Reserve Bank of Dallas,
second quarter, 1995.
11. Stephen P.A. Brown and Mine K. Yücel, “Energy Prices and State Economic Performance,” Economic Review, Federal Reserve Bank
of Dallas, second quarter, 1995. We used the RIMS II multipliers for 2010 from the U.S. Bureau of Economic Analysis to update the
analysis.
12. See Stephen P.A. Brown and Mine K. Yücel, “Energy Prices and State Economic Performance,” Economic Review, Federal Reserve
Bank of Dallas, second quarter, 1995, for an exposition of the model.
13. Previous research on the response of U.S. economic activity to oil price shocks, such as James Hamilton’s 2003 paper, finds the U.S.
economy responds more strongly to oil price increases than oil price decreases. See James D. Hamilton, “What Is an Oil Shock?,” Journal
of Econometrics vol. 113 no. 2, April 2003, pp. 363–98.
14. Stephen P.A. Brown and Mine K. Yücel, “Energy Prices and State Economic Performance,” Economic Review, Federal Reserve Bank
of Dallas, second quarter, 1995.
15. We showed in 2009 that there is coordinated movement in natural gas prices across the Atlantic, which can be accomplished
through LNG shipments. But their results strongly suggest that the coordination of natural gas prices across the Atlantic is facilitated
through oil prices, especially given that natural gas contracts in Europe are linked to oil prices. See Stephen P.A. Brown and Mine K.
Yücel, “Market Arbitrage: European and North American Natural Gas Prices,” Energy Journal vol. 30, special issue, 2009, pp. 167–185.
16. Stephen P.A. Brown and Mine K. Yücel, “Energy Prices and State Economic Performance,” Economic Review, Federal Reserve Bank
of Dallas, second quarter, 1995.
17. At the time of this writing, the most recent detailed GDP data for the states were from 2010.
18. Because the results for the energy-producing states are dominated by shifts within the fossil fuel industry, applying our model to oil
price decreases creates only a slight upward bias to our estimates. That bias increases as we shift our attention toward energy-importing
states.