The Utah radio station KSL 1160 asks the immortal question Could Utah Oil Lower Gas Prices?
[M]ore and more of your money is going towards skyrocketing oil and gas prices. Alternative sources other than the Middle East are being looked at for oil, and one place is right here in Utah.That sounds terrific, until you read the full piece, and realize that they're talking about - wait for it - shale oil and tar sands.
Utah has plenty of oil but it's all stuck in rock or sand....Utah Geological Survey Energy and Minerals Program Manager David Tabet says the reason no one has mined the oil is the extremely high cost.Where does one start? The cost of extracting and refining shale oil is, obviously, going to put its price well above $50 per barrel - if Australia's disastrous experience is any guide, the per-barrel cost could be three or four times that amount, without factoring in external costs - so the idea that it'd reduce gas prices is insane on its face. The corporate welfare hinted at in this article would come from taxpayers, of course; I fail to see how it'd help consumers to have them subsidize artificially low oil prices out of their own pockets.
However since a barrel of oil is now over $50 dollars companies may consider doing it if they get help from the government.
Further, the greenhouse gas emissions of shale oils are about four times higher than that of regular oil, depending on the refining method used. It's also unbelievably water-intensive, which is a serious consideration in the desert West.
Via Energy Bulletin, today's Denver Post has a good, skeptical editorial on the financial hazards of investing in shale oil:
The boom of the late 1970s and early '80s was fueled by crude-oil prices that reached a high of nearly $40 a barrel in late 1981 (or about $80 in today's dollars).
It was thought that the 1.8 trillion barrels of oil locked in the Green River formation in Wyoming, Utah and northwestern Colorado could be developed economically.
Then oil prices plunged sharply, and on "Black Sunday," May 2, 1982, Exxon Corp. pulled the plug on its $5 billion Colony Oil Shale Project near Parachute. Others followed, leaving western Colorado's super-heated economy in a shambles.