This article examines Granger causality between oil prices and drilling activity by applying Hsiao＇s version of the Granger causality method with the aid of cointegration and error-correction modeling to U.S. data for the period 1949-1995. The results of this study indicate that there is no causal relationship between oil prices and oil wells drilled in the short run. Yet, oil prices are found to Granger-cause oil wells drilled in the long run.