Abstract
From the early 1970s to the Global Financial Crisis of 2007–09, U.S. crude oil production followed a declining trend. After the Global Financial Crisis, U.S. crude oil production increased rapidly. This paper addresses the important question “what economic factors have driven U.S. crude oil production since the Global Financial Crisis?”. We propose that factors such as: the price of oil, the one period lagged price of oil, the price of copper, the crude oil price volatility, the Trade Weighted U.S. Dollar Index, and the high yield index spread, are important explanatory variables. Using two modeling approaches, namely, multiple regression, and the random tree methodology, we conclude that the one month lagged price of oil is the most significant explanatory variable, among all considered, for the upward trend of U.S. oil production from 2009 to early 2020.
Highlights
U.S Monthly Oil Production SinceOil continues to play a considerable role in the global economy
Multiple regression, and the random tree methodology, we conclude that the one month lagged price of oil is the most significant explanatory variable, among all considered, for the upward trend of U.S oil production from 2009 to early 2020
After the Global Financial Crisis, U.S crude oil production increased rapidly with two periods of declines: the first occurred during May 2015 to October 2016 and the second two periods of declines: the first occurred during May 2015 to October 2016 and the second from January 2020 to the end of this study in April 2020
Summary
Global oil market dynamics are complex because the supply of oil is characterized by a small number of oil producing countries, some organized as the Organization of Petroleum Exporting. Russia ranked third in global oil production with 11 million barrels per day and Canada and China came after Russia with about 5 million barrels per day each or 5%, respectively, of the total global production. Fluctuations in these global production values impact the global price of oil and understanding what drives U.S oil production clarifies global supply dynamics.
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