This started as a comment on Stephen Landsburg's answer but was getting too long for the comment format.
When a new supply of oil is discovered, it increases the potential new supply. This will cause prices of oil fields to fall (if everything else is constant). However, gasoline costs are determined not by the future supply but by current supply. Gasoline is mildly unstable and will spoil if kept for months or years. Therefore, there is less time shifting once the gasoline is refined than there is while the oil is still in the ground.
Most gasoline will be pumped to an end user within a month or two of refinement. Therefore from the standpoint of day to day prices, it's the amount of gasoline that is currently available that is important.
Assume that the oil field prices fell due to new supply being discovered. This can happen quickly. What takes longer though are actual changes to the end user. The issue is that you can't just produce as much gasoline as you want immediately. Since prices are falling, it's to your advantage to sell as much as you can as soon as you can. But you can only increase current flow if you have slack capacity. If you don't, you need to add new capacity. This restricts how much additional flow can be added immediately by existing participants.
Over time, both existing and new participants can produce oil. If current participants have a cartel to keep supplies down and prices high, they can either increase their production to take advantage of current prices, keep production the same, or decrease production -- possibly so as to keep overall production (including new participants) the same. Cartel members may be reluctant to decrease production though. They are already facing less income due to lower prices. If they also decrease production, they may increase prices in the near term, but they still face lower prices as more new participants join.
Cartel members are engaged in monopolistic pricing. They are producing less than they could in order to maximize profit. Assuming the new participants do not join the cartel, they will price at competitive pricing. They'll produce up to the point where the cost to supply including their profit requirement reaches the demand price.
Note that the actual price will depend on what people do and how the supply is impacted. My point is that price changes won't necessarily be fully realized immediately. There's a difference between short run prices and long run prices and the uncertainty of what's actually happening in the long run. Prices can decrease over time due to a supply shock. They may not though. They could also be combined with a demand change. Or other supply changes. Or external events unrelated to oil that make people more or less risk averse.
I am suspicious of Moore's model. It's plausible but nowhere near definitive (and it aligns with his pro-fracking views, which makes it suspect in my eyes). I'm also suspicious of Landsburg's model. I'm concerned that it skips past short term effects to a long run result. Both models seem overly certain to me. Unfortunately, I have more questions than answers. Lumi's link is interesting, but it leaves out demand and supply in the rest of the world.
The worst part is that any answer should be taken with a grain of salt. We don't know what the world would be like without fracking. All answers here are speculating. Gas prices might have fallen regardless. Or stayed the same. Or even increased.
