Home > Environment, International Marketing, International Trade > New U.S. Oil and The Hecksher-Ohlin Model

New U.S. Oil and The Hecksher-Ohlin Model

Something for my International Economics students to think about:

Stories like this one have big implications for world trade.

A recent report by the U.S. Government Accountability Office estimated that if half of the oil bound up in the rock of the Green River Formation could be recovered it would be “equal to the entire world’s proven oil reserves.”

Both the GAO and private industry estimate the amount of oil recoverable to be 3 trillion barrels.

“In the past 100 years — in all of human history — we have consumed 1 trillion barrels of oil. There are several times that much here,” said Roger Day, vice president for operations for American Shale Oil (AMSO).

The obvious one is in trade flows of the natural resources themselves.

The less obvious implication is how this will change relative endowments! What effect will that have on trade in goods for which energy is used intensively in production?

Even better: analyze the effects on, say, an oil exporters terms of trade.

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