Global shale oil production could boost global GDP by up to $2.7 trillion by 2035

This extra supply could push global oil prices down by around 25%-40% in 2035 relative to an EIA baseline projection of $133 per barrel in that year (in real terms). Level of global GDP could increase by around 2.3%-3.7% ($1.7-2.7 trillion at today’s GDP values). Benefits of oil price reductions due to shale oil will vary significantly by country. Presents significant strategic opportunities and challenges for the oil & gas industry and governments.

The global impact of shale oil could revolutionise the world’s energy markets over the next couple of decades, resulting in significantly lower oil prices, higher global GDP, changing geopolitics and shifting business models for oil and gas companies, according to new analysis from PwC.

John Hawksworth, chief economist at PwC and co-author of the report, said:

“Lower global oil prices due to increased shale oil supply could have a major impact on the future evolution of the world economy by allowing more output to be produced at the same cost. These effects could build up gradually as shale oil production rolls out across the world to produce an estimated rise in global GDP of around 2.3%-3.7% in 2035. This would be roughly equivalent to adding an economy the size of the UK to total global GDP in that year.

“However, the economic benefits of oil price reductions will vary significantly by country. Large net oil importers such as India and Japan may see their GDP boosted by around 4%-7% by 2035 in our alternative scenarios, while the US, China, Germany and the UK might gain by around 2%-5% of GDP.

“By contrast, major oil exporters such as Russia and the Middle East could be significant net losers in the long term unless they can develop their own shale oil resources on a large scale.”