Monday, May 19, 2008

Democrats block US Shale Oil development

The US contains oil shale reserves that dwarf the Saudi oil reserves. The deposits all lie on federal land in the west. With conventional crude oil at $120 a barrel, oil shale is economically competitive. Bringing the vast US oil shale reserves to market could be enough to lower the price of gasoline and home heating oil. Shell Oil company has a process that might bring oil shale to market at competitive prices. They are ready to start making the enormous investments needed to create an oil shale industry.
Shell needs to strike an agreement with the land owner over many things, first most, money. Then come environmental requirements, terms of lease, taxes, permits, and other paperwork. Without agreement on these matters, Shell cannot estimate their return on investment. In simple terms, Shell needs to know how much money they will make from shale oil. Should the landowner (Uncle Sam) demand exorbitant royalties, or make unreasonable environmental restrictions, then Shell will loose money on the project. In short, the project is on hold until Shell can reach an agreement with Uncle Sam.
The Democrats in Congress just passed a law prohibiting the Dept of Interior from "making any new regulations" which is a code phrase meaning "Don't make a deal with Shell". With a stroke of the pen, Congressional Democrats have killed American oil shale development.
The Republicans ought to make a fuss about this. We need to do everything in our power to increase fuel supplies, especially domestic supplies.

1 comment:

Brett said...

We should get Shell to incest in bioheat. A B5 blend of oil. Not only will it help conserve 400 Million gallons of oil, but it will help us go greener. They'll probably be put off because of the possibility of losing profit. But hey we have to make a change somehow. I've been working for NORA and oilheat customers in the northeast are suffering from all these high prices.

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