IMF WORKING PAPER

a change in world GDP growth; a change in the efficiency of oil usage; and a change in the supply of
oil

When demand and supply price elasticities are low, disturbances on either side of the market can
result in sharp price fluctuations. Oil production has indeed continued to grow, including as a result
of the increased exploitation of shale oil and oil sands in North America. There are three types of
unconventional oil supply: shale oil; ultra-deep water oil; and oil sands. Of these, shale oil has the
greatest potential to provide a significant increase in supply over the next decade owing to rapidly
declining costs of extraction and potential for discovering new fields. The other sources of
unconventional oil require long investment lead times and enormous investment in extraction
infrastructure to ramp up production.