Oil Shale

[Don Corleone]

So, if memory serves, back in 1998/1999 timeframe, there was some talk about oil shale development (http://en.wikipedia.org/wiki/Oil_shale). The skeptics said that it wasn't economically viable, and wouldn't be until the price of crude oil surpassed an at-the-time-unthinkable per barrel price of $40/barrel. We just passed $120/barrel. We've been over $50/barrel since 2002. Oil shale deposits are available around the globe, with just about every country having some access. Sure, the refinement is trickier than petroleum, but clearly, we've passed the tip point on economic viability. Speculation is fine, but if anyone has any hard evidence on why we're not seeing increasing oil shale development, I'd really like to know.

[Vladimir]

Who say's we're not? The problem with that is it takes time to develop the structures needed to take advantage of it. A simple Google search on it will reveal a lot of facts, like the fact that we have hundreds of years of oil left.

No facts but $120 a barrel should be enough to make it profitable, if prices stay up this high. Remember what happened in the early 80's to many American oil companies. If it drops down again the billions of dollars invested in exploiting shale will be wasted.

[Papewaio]

The current increase in cost is due to instability in the main light crude oil producing region. The reaction is partially emotionally based. As the oil companies are making there largest profits ever and passing it off based on the instabilities it also is predatory/opportunistic.

Oil Shale will be exploited when a) reserves get low, b) the technology gets cheaper or c) when one of the oil companies (probably a smaller one) is running out of its own reserves and/or wants a jump on the bigger ones.

Problem is if the ME suddenly stabilizes or more likely a large Light Crude deposit is found or a better technique to get the last 20% or so of the reserves out is found (most of the time you can't get the last portion of a light crude oil reserve out as it is essentially oil coated sand)... these could drive prices back down (as could a global recession).

There is also the 'not in my backyard'. Greenies are in general fully behind using metal and energy but don't want either coal, oil or nuclear to be used. They are happy to use solar power and wind as long as they don't delve to deep into the true cost of deployment and maintenance... no one wants to know that the nickel batteries might be nasty when refined in certain less up to date smelters...

[macsen rufus]

The real bottom line isn't about dollars, it's an energy-for-energy balance. New deposits are tougher in a technical sense - when you need to expend a barrel of oil to extract another barrel then reserves are unworkable. AFAIK the expenditure / extraction ratio has decreased already from 1:25 at the turn of the 20th century to 1:8 more recently as newer fields are deeper/more remote/harder to crack etc. When it gets to 1:1, what's the point? (and no, I can't remember the source for the figures, now.... ) :2cents:

[LittleGrizzly]

Im assuming as time goes on the machines that extract oil will become more and more effecient, im guessing they have become more effecient since we first started exrtracting oil. Its only a matter of time...

[ICantSpellDawg]

The problem is, as it becomes more viable, the price of crude would drop in response making it less viable very quickly and thereby killing the shale industry once again. I'm sure that few want to take a chance with that kind of a relationship to such an erratic commodity.

[Don Corleone]

I disagree. The price of crude right now is more driven by specualtors creating shortages then the producers themselves (which has been OPECs argument against increasing production all along). I don't think those speculators are going to give back hard won profits by just opening reserves and dropping prices. Until they have a reason to stop the behavior, they'll continue in this vein.

What's happening to oil today is the inverse of what happened to the Indonsesian currency in 1997. Different reasons, sure, but it's the same principle. And to a certain extent, you can argue that the dollar's decline in value is the exact same phenomenon. Yes, some of the dollar's decline has been due to a true devaluation of it in light of increased national obligations.

But a larger portion of it's decline has been due to currency speculators shorting it.