The Price Responsiveness of Shale Producers: Evidence from Micro Data
Published in Quantitative Economics, 2026
We show that U.S. shale oil producers exhibit a high degree of short-run price responsiveness, primarily through the timing of well completions and refracturing. Using a novel monthly well-level panel covering over 120,000 shale wells across ten states from 2005 to 2019, we document significant supply adjustments to price signals. The response varies significantly across states and firm types, highlighting the importance of accounting for micro-level heterogeneity in production behavior. Mechanisms include accelerating completion of drilled but uncompleted wells and refracturing older wells when forward-looking price signals are favorable. These findings challenge the common assumption of short-run supply inelasticity and call for oil market models that incorporate operational flexibility and forward-looking behavior of shale oil producers.
Recommended citation: Aastveit, K. A., Bjørnland, H. C., & Gundersen, T. S. (2026). The Price Responsiveness of Shale Producers: Evidence from Micro Data. Quantitative Economics, 17(2), 394-430. https://doi.org/10.3982/QE2544
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