To be certain, there are limits to how far this dynamic can take things. Most new U.S. oil is expensive to produce. If prices drop too far, U.S. oil production will stagnate or even fall, reversing the stimulus that had prompted lower prices in the first place. This makes it tough to see how rising U.S. crude production could drive world oil prices below fifty dollars or so for more than a brief period of time. But that’s still a staggeringly different number from the ones people have begun to get used to. So here’s the big question for anyone trying to divine the impact of rising U.S. oil production on world prices: What sort of response will other oil producing countries mount, alone or collectively? Will some of them restrain production and put a floor on prices? Or will discipline break down and result in a flood of oil?

Reprinted from The Power Surge by Michael Levi with permission from Oxford University Press USA. Copyright (c) Michael Levi, 2013 and 2014 and published by Oxford University Press USA. (www.oup.com/us<http://www.oup.com/us>). All rights reserved.

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