OIL

OIL

When the oil crises hit us in the 1970's, there was a lot of talk about oil shale. Oil shale is basically rock that has oil in it that can be retrorted out and refined like crude oil. The problem with doing it is the cost. The cost of turning oil shale into crude oil is over $40 per barrel. Oil has got to be about $70 per barrel to make it economical to do the extraction. When the price per barrel went this high in the 1970's, many people invested in companies and ventures set up to do this work. Well, the price of oil went back down to $30 per barrel and these people lost all their money.

The United States has about 70% of all the oil shale reserves in the world. The land that these reserves are on is owned by the government. This reserve is located in Colorado, Wyoming and Utah. The fact that there is almost no water available in that area makes it more expensive to refine. If we could get the oil out of this oil shale, we would have more oil reserves than any country in the world except Saudi Arabia.

Well, oil again is above $70 per barrel. Because investors lost so much money in the 70's, they will be reluctant to invest again in oil shale operations until the price of oil is at a high point for a long time. If we were in a real crises, I would think the government would be pushing to make use of these reserves. Maybe this is our ace-in-the-hole to avoid dependence on oil producing nations in the case of worldwide emergency.