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4801Re: Unlimited Oil? Yeah right..

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  • enjax
    Jun 4, 2002
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      --- In carfree_cities@y..., "dubluth" <dubluth@y...> wrote:
      > You stated that it currently costs a dollars worth of energy to
      > extract a dollars worth of oil. For that to be correct, someone
      must
      > be giving the oil companies the energy because they would elect not
      > to produce if their costs exceed revenues under current prices.
      >
      > Bill

      Bill,

      I was referring to the current costs of extracting oil from oil
      shale, which involves the additional cost of mining and extracting
      the oil from the shale. This additional costs roughly translates
      into $1 spent on extraction to recover $1 worth of oil at today's
      prices - not exactly a bargain. The extraction process isn't
      particularly environmentally friendly either as it makes drilling for
      oil in ANWR look benign by comparsion.

      Earlier I wrongly stated that the price of gas would triple in the
      United States if the price of oil rose to $40 a barrel. I didn't
      factor in the static costs such as refining, distribution, and taxes
      which explains the error. Incidentally, The last time we had
      sustained prices of around $40 a barrel in the U.S. was during the
      severe recession of the early 80s after the whole Iranian fiasco. The
      price of gas back then, adjusted for inflation, was around $2.50 a
      gallon or about twice what we pay today. Hardly insignificant if you
      remember the double digit inflation and interest rates of the era.

      -Matt
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