The recent decline in international oil pricesis one of the largest in over 30 years (World Bank, 2015), with global oil prices falling by 40 percent between July and December in 2014. In early 2015, oil prices continued to fall reaching just below US $50 per barrel, approximately 50 percent below an average price of US $105 per barrel between 2011 and 2013. The sharp decline in oil prices is said to be linked to constrained global demand caused by lackluster growth and the increasing significance of renewable energy sources resulting in a decline in the importance of oil in GDP. These explanations seek to place the recent dip in prices in the context of a demand shock; however, there is a stronger case that can be made when viewed from a supply-side perspective. Perhaps, the strongest driver of the current fall in oil prices is the rapid expansion of unconventional oil production in North America.
Book Review by Laron Alleyne_Fueling Up The Economic Implications of America’s Oil and Gas Boom, by Trevor Houser and Shashank Mohan, Peterson Institute for International Economics, 2014.pdf