Senior Kyle Lemons, a student at the Cox School of Business, has been awarded the 2014 Larrie and Bobbi Weil Undergraduate Research Award for his paper “The Shale Revolution and OPEC: Potential Economic Implications of Shale Oil for OPEC and Member Countries.”

The Larrie and Bobbi Weil Undergraduate Research Award is for library research, open to undergraduate students that have worked on a research paper in the preceding year. Papers are nominated by professors and reviewed by a panel of faculty members. Lemons was nominated by Santanu Roy and the review committee comprised of Russell Martin, Melissa Dowling, and Assistant Dean Mary Hollerich.

The committee noted that Lemons’ paper is well written, supported by various print and online sources and makes use of authoritative statistics from primary sources such as OPEC and the U.S. Energy Information Administration.

“It took a topic that may seem dry as dust into something that was readable,” Martin said. “It was original and unusual.”

The paper focuses on the potential of shale oil production in the US and abroad, its
impact on segmented Organization of Petroleum Exporting Countries (OPEC) market
shares and responses to substantial shale developments.

“The research paper asks a set of very important and original research questions,” Roy said. “In blending real world data, econometric analysis and economic theory to answer good, well-posed and interesting questions, Kyle’s paper accomplishes the ideal that all good economists try to achieve.”

Lemons chose the topic because the vastness of shale oil in geography and reserve size has the potential to change OPEC’s strategy and operating conditions. According to Lemons, for the last several decades, OPEC has reaped the benefits of declining Non-OPEC reserves and relatively stagnant Non-OPEC oil production growth.

“I wrote the paper because I was interested in the topic, but also to (hopefully) shed more light on an issue that had previously been lightly researched at best,” he said.

U.S. Energy Information Administration projected that by 2040 shale oil production will constitute 8 million barrels of oil per day, roughly the equivalent of adding another United States to the global oil supply mix.

Lemons developed his own models to fill in gaps where published statistics were not readily available, and used the available data, his own models and game theory to make predictions on how OPEC might react to various shale oil market scenarios.

“I was very fortunate to have the assistance of my faculty sponsors, Dr. Santanu Roy and Professor Bruce Bullock, as well as help from other members of the SMU Economics Department and self-proclaimed writing savant Sammy Metzger,” Lemons said.

Lemons grew up in the Permian-Basin region of West Texas where he saw first-hand what the impact of shale development on communities and businesses.

“What drew me to the topic was what effect shale oil could have in the broader scheme of things,” he said. “A dramatic increase in global oil production would have several implications, but, if there’s one organization or country that would appear to be particularly vulnerable, it would be OPEC.”

Lemons is double majoring in economics and real estate finance with a concentration in energy management. After graduation, he and his roommate plan on starting a hydraulic tubing testing business in West Texas.

His research and paper is part of his work for Departmental Distinction in Economics and the Mayer Undergraduate Research Fellowship. Roy is Lemons’ faculty sponsor for his departmental distinction research paper. Lemons’ research project followed up a course on the Theory of Industrial Structure, taken with Roy.

“It is always very satisfying when a course motivates a student to go on and do interesting economic research,” Roy said. “But it is even more satisfying to interact with that student during the process of research and to observe his or her mind mature intellectually and learn the joy of discovery. There is no greater reward for a professor.”

Lemons will receive his award at the April Honors Convocation and the paper will be digitized and available through the Digital Repository. A print version will be deposited in the DeGolyer Library.