Rich! We're rich I tell ya!
That is, if the enviro-donkies don't prevent us from tapping the vein.
Here's a little taste of the big story:
The United States has an oil reserve at least three times that of Saudi Arabia locked in oil-shale deposits beneath federal land in Colorado, Utah and Wyoming, according to a study released yesterday.
(HT: Instapundit)
16 comments:
The article says there are two factors:
1. Higher prices.
2. Recent technological advances.
The second might undercut the dynamic you suggest.
The Canadians have been trying to make money off of this since the early '90s.
Shale mining has a severe environmental impact, and the extraction process is labor and capital-intensive. Basically, to harvest the oil, we'll have to make gigantic quarries filled with giant yellow Tonka trucks and big rock smashers.
The real question is: Is the oil worth the environmental impact? In the amount of time it takes to get a shale-oil quarry up and running, we could be well on the way to reducing fuel usage and upping the use of alternative fuels and energy sources.
"It cannot and will not lead to oil proces going back down because as soon as they do it's no longer wothwhile to extract it."
Well said, T.
This is precisely the reason why it bugs me SOOOO much when I hear the yelps of eco-nuts that "we are running out of oil."
Well, it is true, in the larger sense. Oil is a finite natural resource. It's not exactly renewable. Once you burn that stuff up, it be gone, man.
"Well, it is true, in the larger sense. Oil is a finite natural resource. It's not exactly renewable."
This is not necessarily true. While I do not contend to be an expert on oil formation, there has been some debate about oil being a "fossil fuel" and oil being generated via an abiotic process.
The abiotic theory is not new, and there are some who believe it to be hogwash (mostly the anti-war left), but Russian scientists have put many decades of research into it.
"Once you burn that stuff up, it be gone, man."
By virtue of the cost of extraction, it would be impossible to "burn it all up" ... unless the Earth were to be burned up with it.
"At some point, costwise, it will be effectively all gone. It doesn't matter if there is actually some left when it is no longer economically feasable to extract it."
Right on ... the economically feasible part is the key.
To expand, this means that at some point, the cost of extraction will be so high that capital will flow into the energy sectors that will begin to have a cost advantage over oil.
Ain't economics grand?
Wait, wait! I have them too! I think CLA will try to say something snarky and condescending!
I'm an economist!
Look ... I am simply expanding on your own argument.
If that sounds condescending ... well what can I say.
I'll try to expand my previous post.
If it is not "economically feasible" to extract oil from shale, that means that there has to be an alternative that *IS* "economically feasible".
Right now the economically feasible option is pumping it out of existing oil fields.
When the cost of pumping the KNOWN reserves increases (or as the KNOWN reserves start to deplete and cannot meet demand), more capital flows into exploration, especially in places where it is hard (ie, costly) to look.
And so on ...
The more capital that flows into exploration, the more efficient (ie, cheaper) that exploration becomes; the same is true for the extraction. I believe this is what Hunter's post was about.
Some people are under the impression that as oil gets more expensive, there will be no alternative, and I can sympathize with that viewpoint. I would like to see more alternatives out there. I would like an electric car. I am a technology lover! The trouble is, however, that the alternatives to gasoline are either more expensive or offer less for the same cost.
I would *love* it if we, as a nation, would conserve oil (among other things), but that will not change the economics of getting capital to flow into alternatives.
BTW ... I am not an economist, I just play one on the internet ... at least thats what I *think* I'm doing.
"When we (effectively or actually) run out of oil, people will try to find a replacement."
As we "run out of oil", the supply would decrease, thus causing the price to go up accordingly. At some point, the price will get so high that alternatives become more affordable ... relative to the price of oil.
Right now, we are seeing hybrid cars that 20 years ago would not have been feasible. I'd say that they are "almost economically feasible" at this time, because the extra price you pay cannot be made up for in fuel saved.
This means that hybrid cars will need to be made more efficiently (and I trust that economies of scale will help) in order to be a real economic alternative -OR- the price of gasoline will have to rise.
This is all the opinion of a NONeconomist ... take it for what its worth.
'd say that they are "almost economically feasible" at this time, because the extra price you pay cannot be made up for in fuel saved.
Depends on the hybrid you buy. A Civic or Prius hybrid costs around $20,000 and will save you approximately $2,000 in gas annually. It will also last you about 10 years of running, if not more, with little maintenance. That saves you, over a decade, $20,000. That's the price of another car.
We're going to see a repeat of the 80's oil-wise. A big spike in oil prices (see late 70's, see now) will lead to a big consumer movement toward smaller and/or more efficient cars. Plus, more oil will be exploited that was not worth getting earlier. Then, there will be a glut in the supply. And prices will drop substantially.
I do think the electric car and hybrids will become more prevalent. It's fine with me. The states won't like it until they figure out how to replace lost revenue. But the gas vehicle won't go away for good until the cheap oil supply is truly gone. And that may be never, particularly if the Middle East ever gets it sh-- together.
I don't think the transition will any more difficult than it was moving from real horsepower and candlepower to the artificial approximations thereof. A statist economy would run all the way up to the wall, hit it, and then be screwed for a good while. A free one will naturally adapt to deal with real market conditions and we won't miss a lick.
Amazing statements from an avowed anarchist. I'm blown away. The idea that a statist economy would handle something like this better than the free market gives me a pretty good understanding of why you are so contemptuous of economics. Having looked at the real world, your assessment is absurd.
In addition, what makes you think this transition has to be faster than the horse and buggy one. I don't see any sign that is the case. It's not like we're running out of oil in five years and we're racing against the clock.
We just have a completely different view of the facts at hand and what they mean.
Again, it is shocking that you as an anarchist would look to Carter to push for alternative energy. It wasn't because of some presidential push that the internet exploded. It wasn't because of a national policy that we started driving cars. When it happens, it will be the good old profit motive bringing change more rapidly than anyone thought possible.
As I criticize the speed of statist solutions, I remember the great old Soviet story:
A man went to apply for his state-provided Volga (a car). He was told, "Okay, we'll have it ready for you in twelve years."
He responded, "Morning or afternoon?"
The clerk looked at him in surprise and asked, "What does it matter? It's twelve years from now."
The man responded, "The plumber's coming in the morning."
It was the private choices of consumers that created the need/demand for the highways.
Ditto with the internet. Without private iniative, it would still be this marginally-known underutilized communication infrastructure.
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