The US shale revolution has changed the oil market for good. From a near standing start in 2010, US shale oil production has increased to around 4m barrels a day today, with much of that production estimated to be somewhere broadly in the middle of the cost curve. Although US shale oil accounts for less than 5 percent of the global oil market, it has already had a profound impact. The rapid growth in US shale oil last year was the main factor causing the collapse in oil prices: US oil production increased by more than twice the entire expansion in global oil demand. More generally, the different production techniques and financing structures found in the US shale industry are likely to have a lasting impact on global oil market dynamics, in at least three important ways. First, shale oil is likely to respond far more quickly to changes in prices. The lead times between investment decisions and production of US shale can be measured in weeks, rather than the years taken for conventional production. And the life of a shale well tends to be far shorter than that for a conventional well, with production typically falling by as much as 70-80 per cent in the first year. As such, as prices fall, investment and drilling activity will quickly decline and production will soon follow. But the contraction of the shale industry that we are now observing should not be seen as a fatal blow: as prices recover, US shale is likely to bounce quickly back.