Shale Oil Pros And Cons

This informative article by Lutz Kilian discusses shale oil and its effect on oil prices in the United States. Shale oil is a term used by the oil industry for oil that is obtained from low-permeability rock, and it has caused a resurgence of oil production in the United States. This type of oil production was not available until quite recently, because of several technological advances in the industry. Currently, shale oil production, mostly from western states, accounts for a sizeable amount of the country’s crude oil production (Kilian, 187). This article discussed the history of shale oil, its advantages and drawbacks, the impact on oil prices and oil production as well as some projections for its use in the future.
Crude oil is another …show more content…
There aren’t many pipelines in the US to transport the oil or they were running in the wrong directions. There was a glut created in Cushing, Oklahoma from the excess of oil being imported. Where in other parts of the country there were oil shortages where the pipelines didn’t reach. This abundance of oil in Oklahoma started to decrease when pipelines from Texas to Cushing were reversed. There were also some new pipelines opening that helped in distributing this oil but none of these reached the East Coast. Another form of transportation that increased heavily during this time was rail and barge shipping. “10 percent of U.S. crude oil production moves by rail, the shipping of shale oil relies heavily on rail” (Kilian, 195). The work of rail and barge transportation really helped transport the oil to places that the pipelines couldn’t reach. However, the Jones Act constricted most of the barges shipping. This is because “..the use of U.S.-flagged vessels for transporting goods between the U.S. ports…restricted the number of vessels available and inflated oil tanker rates on these routes” (Kilian,196). However, there has still been huge surges in the demand for transportation of oil. Economically, this has made the transportation services of refineries also benefit largely off of the shale oil revolution (Kilian, …show more content…
It was a factor in lifting the export ban as well as pushing America to start exporting crude oil again. That alone made the US less dependent on foreign oil and foreign oil shock but opened the US up to new and different price/oil concerns. The shale oil revolution also seemed to revolutionize the transport of oil, which followed the big glut of shale oil in Oklahoma that needed to be alleviated. Even though oil supply shocks only have modest effects on the prices of oil, the shale oil revolution was a part in some of the decrease in price. The shale oil revolution yielded economic benefits, with the refineries and transportation sectors benefiting the most. Jobs in shale oil production have increased as well. Even though the shale oil revolution didn’t greatly impact the prices of oil; it did play a huge role in changing the shale oil revolution as we know it. It should have a prolonged presence in oil production in the United States, especially if new technologies can expand the reach of oil play