Journal of Economics and Modelling

Journal of Economics and Modelling

Investigating the Oil and Gas Chain in the United States Using the Average Propagation Length Index and Implications for Iran

Document Type : Original Article

Authors
1 , Faculty of Economics and Political Science, Shahid Beheshti University, Tehran, Iran
2 Faculty of Economics and Political Science, Shahid Beheshti University, Tehran, Iran
10.48308/jem.2026.244626.2061
Abstract
This study aims to explain the structural position of oil and gas extraction activities within the national production network of the United States and how it has transformed following the development of shale oil. To this end, the 71-sector input-output tables of the US economy for the period 2000 to 2023 were first internalized and then converted to constant 2016 prices using the double deflation method. Subsequently, the Average Propagation Length (APL) index was calculated for the oil and gas extraction sector in both backward and forward directions. The results indicate an upward trend in the values of the normalized indices. Specifically, following the boom in shale oil during the mid-2000s, the length of the chains and the depth of inter-sectoral linkages have increased significantly. Numerical evidence demonstrates that the oil and gas extraction sector has simultaneously emerged as an entity with extensive intermediate demand for upstream inputs and a key supplier of feedstock for downstream industries, causing its shocks to propagate rapidly throughout the entire economy. Overall, the findings suggest that the shale revolution was not merely a quantitative leap but resulted in the deepening of production chains. Through a comparative approach, this pattern provides clear policy implications for Iran's transition from raw material exports towards the development of its oil and gas value chain.
Keywords