Association Webinars: Is another oil price shock possible, and would it matter?


We attribute oil shocks in 1973, 1979, 2008, and 2011 to the actions of the OPEC cartel and ask whether OPEC could perpetrate something similar in the present time of shale oil and decarbonization; is it still possible? In particular, we foresee the size of the global fleet of internal combustion engines peaking around 2028, and declining exploration and production of crude oil outside of OPEC countries increasing OPEC's market share, so our answer is "yes, until the mid-2030s, though the flexibility of shale production mitigates the possibility." We also quantify the negative macroeconomic impacts of past and present fluctuations in the price of oil; would it still matter? We find that a quarter-long doubling in the price of crude oil in 1979 would have eventually lowered world GDP by eleven percent, but, in 2019, would have only eventually lowered world GDP by four percent, so our answer is "yes, but not as much."


Samuel A. Van Vactor
President, Economic Insight, Inc.
Ph.D., University of Cambridge

Dr. Van Vactor is President of Economic Insight, Inc., a firm of consulting economists specializing in energy and natural resource issues. He also teaches Energy Economics at the Economics Department, University of Oregon in Eugene. He has advised many public and private organizations on economic and energy matters, including the American Petroleum Institute, the U.S. Department of Justice, the Bonneville Power Administration, Pacific Gas & Electric Corporation, Sempra, the Western Interstate Energy Board, Sasol, Tokyo Electric Power Company, the Mitsubishi Research Institute, Tokyo Gas, Gaz de France, Gas Natural, the State of Alaska, and the Government of India. Dr. Van Vactor has counseled a variety of major oil and gas companies, including Chevron, Texaco, Exxon, Mobil, BP, and Shell and has authored numerous articles about the energy industries. He has appeared as an expert witness in international arbitration, tax hearings, civil disputes, antitrust cases, and regulatory proceedings. Dr. Van Vactor is the author of An Introduction to the Global Oil & Gas Business, from PennWell Publications.

Before his present activity, Dr. Van Vactor was an officer on destroyers in the U.S. Navy, an economist at the U.S. Treasury, a senior economist at the International Energy Agency of the OECD, and head of energy planning for the State of Oregon. He has lectured on energy and economics subjects at the University of Maryland (European Division), Portland State University, University of Western Australia, Cambridge University, and Columbia University. He has also conducted seminars on oil and gas pricing, contracting and risk management in Singapore and Kuala Lumpur.

Marc H. Vatter
Economist, Elevation Direct Corporation
Ph.D., Brown University

Dr. Vatter’s work involves applied economic theory, market simulation, econometric analysis, and fuel price forecasting, and has focused on wholesale power markets in the Pacific Northwest, California, the Mid-South, Upper Midwest, and New England, on unconventional fossil fuel plays such as the Barnett and Bakken Shales, and on global petroleum markets and the OPEC cartel. His consulting work is currently geared toward generating asset evaluation, especially in Mexico. He has delivered expert testimony on issues related to wholesale power markets before federal, Mississippi, Michigan, and Rhode Island regulators, published and presented research at conferences, including “OPEC’s Kinked Demand Curve” (Energy Economics, 2017) and “OPEC’s Risk Premia and Volatility in Oil Prices” (International Advances in Economic Research, 2019). He has taught energy economics at the graduate level at Universidad del Pacifico in Lima, Peru, and he now teaches a graduate course in economic analysis to business students at Rivier University in Nashua, New Hampshire.


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