What is the price elasticity of demand for crude oil? If the supply of crude oil were to increase by, say, 3%, how much would the price of crude drop to restore equilibrium in the market? Alternatively, if the supply decreased by 3%, by how much would the price increase?
In the short run, the answer is likely that the price would change quite a bit more than in the longer run. But Jerry Taylor, of the Cato Institute, appears to believe the price elasticity of demand is one in the long run[h/t Cafe Hayek]. Discussing the effects of opening up more wilderness and northern areas for oil exploration and drilling, he says,
By the time those new fields would be producing, global oil production will probably be about 100 million barrels per day. Optimistically, the fields would yield about 3 million more barrels a day – for a long-run cut in the price of crude of about 3 percent.
I have no idea where he obtained that estimate for the long-run price elasticity of demand for crude oil, but it is probably not a bad guess. Overall, if in doubt, a guess that the price elasticity of demand for something is about 1 is probably a good starting point, especially in the long run.