Gas Prices and the view from the peak...

A good article, with an interesting bit on the realities of fracking:

Quote :

The Peak of Peak-Oil Denial

Costs of production are rising inexorably—and fairly rapidly—as a result of replacement of conventional crude with oil produced from horizontal drilling and hydro-fracturing, ultra deepwater drilling, and tar sands. Only a decade ago, a world oil price of $20 per barrel evidently provided plenty of incentive for the industry to develop new supply sources, as total global production continued to increase year after year. Today, most new projects look uneconomic if oil prices are anything shy of $85. Ironically, pundits often depict this shift as a miraculous new development that promises oil aplenty till kingdom come.

During the past few months, op-eds and talking heads have announced the death of “the peak oil theory” even as actual world crude production rates remain stagnant and oil prices soar. The fallacy in this thinking arises from a confusion of reserves with production rates. With oil prices so high, staggering quantities of low-grade hydrocarbons become theoretically profitable to produce. It is assumed, therefore, that the scarcity problem has been solved. If we extract enough of these low-grade resources, that will bring oil prices down! But of course, if the oil price goes down then these unconventional sources become uneconomic once again and effectively cease to be countable as reserves.

The absurdity of the “new golden age of oil” line of thinking will take a while to reveal itself; how it will do so is fairly easy to divine from trends in the “fracking” shale gas industry, where temporary abundance (due to high rates of drilling a few years ago when gas prices were high) has driven gas prices back down to the point where producers are losing money, cutting drilling rates, and selling off leases. All that’s left to this sad story is the coming denouement, wherein shale gas producers go bankrupt, production rates fall, and the nation finds itself back in the midst of a natural gas supply crisis that pundits claimed had been deferred for a century.

The oil problem can be summed up simply: Fossil fuel supply boosters know how to add, but they’ve forgotten how to subtract. Seeing new production coming on line from North Dakota, for example, they extrapolate this growth trend far into the future and forecast oil independence for the nation. But most US oilfields are seeing declining rates of production, and individual wells in North Dakota have especially rapid decline rates (up to 90 percent in the first year). Do the subtraction properly, and it’s plain that net supplies will continue growing only if drilling rates climb exponentially. That, again, spells higher production costs and higher oil prices. If the economy cannot support higher prices, and hence high drilling rates, then net total rates of production will drop. The one future that is impossible to achieve in any realistic scenario—low prices and high production rates—is precisely what is being promised by politicians and oil industry PR hacks.

And those at the top still don't get it

Quote :

On Feb. 6th, Dr. Marcia McNutt, Director of the US Geological Survey, delivered a lecture at Indiana University entitled “US Energy Outlook: Whatever Happened to ‘Peak Oil?’” According to the press release announcing this talk,

Quote :

Not so many years ago, the public heard much concern that the nation, and the globe, had or was about to reach the point of peak oil production and would be on a downward trajectory due to declining resources. The current fact is that despite growing demand for energy, fossil fuel resources have never been higher.

“Fossil fuel resources” and “oil” are not the same thing. There are two major fossil fuels in addition to petroleum: coal and natural gas. While coal and natural gas are indeed -- at the moment – relatively abundant, Director McNutt herself observed that the three fossil fuels are not easily substitutable or fungible. You can’t shovel coal into your gas tank, and almost none of us own cars that can run on natural gas.

This admission alone significantly undermined Dr. McNutt’s principle assertion, but there is more. The main problem with Dr. McNutt’s talk is that it was based on a critical evasion. “Peak oil” is not simply about the resource base - it’s about the flow rate of petroleum. It’s about the amount of oil that is delivered to market in a given year. It is defined as the peak of global production3. But curiously, Director McNutt failed to even address production in her presentation.

I try to drive this point home as much as I can, especially in response to the "drill, baby, drill" whining from the right. Saying we have 1,000 years left of oil doesn't mean anything if we cannot get to it fast enough to keep up with demand. What we do have left is pretty damn awful, expensive to get to and expensive to clean. But I digress...

Quote :

After the conclusion of Dr. McNutt’s prepared remarks, a questioner – an undergraduate student - observed that she had avoided the very topic that she had supposedly come to address. The student referred to a recent paper in the premier scientific journal Nature that had noted that, despite volatile but mostly historically high prices, global oil production has been virtually stagnant for the past six years4. The Nature article’s title, “Oil’s Tipping Point,” suggests that in fact the world has already reached peak petroleum production – peak oil.

Director McNutt could not effectively respond to the student’s question, finally stating that he was asking about an “economic” phenomenon, and that as a scientist she was not qualified to speak about it5. This was a shocking evasion. Clearly the intent of her talk was to reassure the audience that peak oil was not an imminent problem, but somehow we did not feel reassured.

. . .

Director McNutt’s evasions suggest the truth of a recent comment by the nation’s first Secretary of Energy, James Schlesinger: “The peak oil debate is over… the peakists have won.”9 More ominously, it suggests that officials in positions of national responsibility cannot or will not level with the public. Oil is indeed a precious commodity, but false reassurances that “all is well” threaten to deprive us of other precious commodities: the time and the will to begin the necessary adaptation to oil’s increasing scarcity before it is too late to avoid a major crisis.

O'Reilly doesn't get it either, or he wouldn't be getting it if he came to this conclusion by himself rather than simply reading the scripted talking point:

Quote :

O'Reilly wrote:

However, if the Obama administration wanted to, it could ask Congress to raise export taxes on the oil companies to encourage them to sell their products here. Think about it. The oil companies are regulated by the federal government. They can't drill on land nor in American waters without permission from the feds. Many Republicans want to drill baby drill but what's the point if all the oil goes to China? Increased production obviously doesn't mean lower prices for us.

Here is the reason his proposal would have zero impact on gas prices, and would in fact accelerate the closure of U.S. refineries. O'Reilly believes that U.S. oil companies are drilling for oil, producing gasoline, and shipping that overseas (or simply shipping the crude overseas). As shown above, net imports of crude oil are still 9 million barrels per day -- a number that has not changed much in the past few years. It is the finished products that are being exported -- not crude oil -- and these finished products are being made from imported oil. We have oil refiners like Valero -- who don't actually produce oil at all, but import oil from countries like Mexico and Brazil, refine it, and ship gasoline back to them. Between just Mexico and Brazil (and there are others), we are importing 1.5 million barrels of oil per day, and sending them back about a million barrels a day of finished products. (Some of the oil we get from them does stay in the U.S. as finished products). If you subtract our finished product exports from our oil imports, you still end up with net imports of crude oil and crude products of 8 million barrels per day. Hence, the U.S. still operates at a significant import deficit, which contradicts claims that we have plenty of oil and gas in the U.S.

. . .

Bill O'Reilly is promoting a false belief: that the U.S. is awash in oil and that gasoline prices are high because we are shipping gasoline overseas instead of selling it domestically. The truth is that the U.S. does not produce nearly enough oil to meet our fuel demands, but we import about a million barrels a day more than we need and export some of the excess as finished products, creating jobs and helping the balance of trade in the process. The reason we are doing this is that domestic demand for gasoline has fallen in recent years, and refiners can therefore either close more refineries or they can find other markets for their products. Thus the main reason to reject O'Reilly's idea is simply because it is based on a false notion. He would do a great service to his viewers if he clarified the situation.

So, yeah... Here's to hoping we don't hit $5 a gallon this summer.

It's Not Obama's Fault That Crude Oil Prices Have Increased

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Is President Obama responsible for the spiraling price of gasoline? Republicans say yes, but the facts say no.

Why have gasoline prices increased since the start of the year? The simplest explanation is that the price of crude oil has increased. Specifically, the spot price for Brent (North Sea) crude has increased $16 a barrel since January. Given that there are 42 gallons to a barrel, that works out to a 38 cent increase in the price of a gallon of oil. Spot prices for gasoline trade in New York have increased about 41 cents per gallon over the same time frame. So there you go.

Gingrich's Gaseous Argument

Quote :

Quoted: "The price of gasoline when Barack Obama became president was $1.89. All of this gigantic increase came from his policies." —Newt Gingrich, March 6, 2012

Reality: U.S. gasoline prices, like prices throughout the advanced economies, are determined by global market forces. It is hard to see how Mr. Obama's policies can be blamed (see Stat of the Week).

. . .

Mr. Gingrich promises to make the U.S. "energy independent," which he says will push prices down and isolate U.S. drivers from political tensions in the Middle East.

Mr. Gingrich ignores the basic fact about U.S. gas prices: They are largely fixed by the price of crude oil, which is determined by global supply and demand.

When Mr. Obama was inaugurated, demand was weak due to the recession. But now it's stronger, and thus the price is higher.

What's more, producing a lot of oil doesn't lower the price of gasoline in your country. According to the U.S. Energy Information Administration, Germans over the past three years have paid an average of $2.64 a gallon (excluding taxes), while Americans paid $2.69, even though the U.S. produced 5.4 million barrels of oil per day while Germany produced just 28,000.

So, once again, Fox News and every Republican running for office is a lying shack of shit, and demonstrates that the muppets running for office will be ill equipped to handle our energy crisis since they continually demonstrate they have no idea what it really is. It's also funny to watch conservatives condemn the free market when it's doing what they usually applaud it for doing - higher demand = higher prices.

The continued and endless misunderstanding of the most basic scientific issues is why I'm still firm in my vote for Obama (and Democrats in general), and why I will be again. Obama isn't the Messiah, he can just to 7th grade math.

Meanwhile Gingrich keeps promising he'll get prices down to $2.50 a gallon. Truly wishful thinking unless he's planning to create a world-wide depression.

Following article was edited for brevity.

Quote :

FIVE Facts About Gas Prices
1. Domestic Energy Production Has Soared Under President Obama:
2. President Obama Has Taken Huge Steps to Reduce Our Dependence on Oil:
3. Big Oil Made a Record $137 BILLION in Profits Last Year:
4. Republican Politicians Oppose Ending Taxpayer Handouts to Big Oil:
5. Republican Politicians Want to Cut Big Oil’s Taxes Even More:
IN ONE SENTENCE: Instead of giving billions more in handouts to Big Oil despite the industry’s record-breaking profits, President Obama has presided over a dramatic increase in domestic energy production coupled with unprecedented efforts to decrease Americans’ spending at the pump by modernizing fuel economy standards.

Heretic wrote:

A good article, with an interesting bit on the realities of fracking:

Quote :

The Peak of Peak-Oil Denial

Costs of production are rising inexorably—and fairly rapidly—as a result of replacement of conventional crude with oil produced from horizontal drilling and hydro-fracturing, ultra deepwater drilling, and tar sands. Only a decade ago, a world oil price of $20 per barrel evidently provided plenty of incentive for the industry to develop new supply sources, as total global production continued to increase year after year. Today, most new projects look uneconomic if oil prices are anything shy of $85. Ironically, pundits often depict this shift as a miraculous new development that promises oil aplenty till kingdom come.

During the past few months, op-eds and talking heads have announced the death of “the peak oil theory” even as actual world crude production rates remain stagnant and oil prices soar. The fallacy in this thinking arises from a confusion of reserves with production rates. With oil prices so high, staggering quantities of low-grade hydrocarbons become theoretically profitable to produce. It is assumed, therefore, that the scarcity problem has been solved. If we extract enough of these low-grade resources, that will bring oil prices down! But of course, if the oil price goes down then these unconventional sources become uneconomic once again and effectively cease to be countable as reserves.

The absurdity of the “new golden age of oil” line of thinking will take a while to reveal itself; how it will do so is fairly easy to divine from trends in the “fracking” shale gas industry, where temporary abundance (due to high rates of drilling a few years ago when gas prices were high) has driven gas prices back down to the point where producers are losing money, cutting drilling rates, and selling off leases. All that’s left to this sad story is the coming denouement, wherein shale gas producers go bankrupt, production rates fall, and the nation finds itself back in the midst of a natural gas supply crisis that pundits claimed had been deferred for a century.

The oil problem can be summed up simply: Fossil fuel supply boosters know how to add, but they’ve forgotten how to subtract. Seeing new production coming on line from North Dakota, for example, they extrapolate this growth trend far into the future and forecast oil independence for the nation. But most US oilfields are seeing declining rates of production, and individual wells in North Dakota have especially rapid decline rates (up to 90 percent in the first year). Do the subtraction properly, and it’s plain that net supplies will continue growing only if drilling rates climb exponentially. That, again, spells higher production costs and higher oil prices. If the economy cannot support higher prices, and hence high drilling rates, then net total rates of production will drop. The one future that is impossible to achieve in any realistic scenario—low prices and high production rates—is precisely what is being promised by politicians and oil industry PR hacks.

And those at the top still don't get it

Quote :

On Feb. 6th, Dr. Marcia McNutt, Director of the US Geological Survey, delivered a lecture at Indiana University entitled “US Energy Outlook: Whatever Happened to ‘Peak Oil?’” According to the press release announcing this talk,

Quote :

Not so many years ago, the public heard much concern that the nation, and the globe, had or was about to reach the point of peak oil production and would be on a downward trajectory due to declining resources. The current fact is that despite growing demand for energy, fossil fuel resources have never been higher.

“Fossil fuel resources” and “oil” are not the same thing. There are two major fossil fuels in addition to petroleum: coal and natural gas. While coal and natural gas are indeed -- at the moment – relatively abundant, Director McNutt herself observed that the three fossil fuels are not easily substitutable or fungible. You can’t shovel coal into your gas tank, and almost none of us own cars that can run on natural gas.

This admission alone significantly undermined Dr. McNutt’s principle assertion, but there is more. The main problem with Dr. McNutt’s talk is that it was based on a critical evasion. “Peak oil” is not simply about the resource base - it’s about the flow rate of petroleum. It’s about the amount of oil that is delivered to market in a given year. It is defined as the peak of global production3. But curiously, Director McNutt failed to even address production in her presentation.

I try to drive this point home as much as I can, especially in response to the "drill, baby, drill" whining from the right. Saying we have 1,000 years left of oil doesn't mean anything if we cannot get to it fast enough to keep up with demand. What we do have left is pretty damn awful, expensive to get to and expensive to clean. But I digress...

Quote :

After the conclusion of Dr. McNutt’s prepared remarks, a questioner – an undergraduate student - observed that she had avoided the very topic that she had supposedly come to address. The student referred to a recent paper in the premier scientific journal Nature that had noted that, despite volatile but mostly historically high prices, global oil production has been virtually stagnant for the past six years4. The Nature article’s title, “Oil’s Tipping Point,” suggests that in fact the world has already reached peak petroleum production – peak oil.

Director McNutt could not effectively respond to the student’s question, finally stating that he was asking about an “economic” phenomenon, and that as a scientist she was not qualified to speak about it5. This was a shocking evasion. Clearly the intent of her talk was to reassure the audience that peak oil was not an imminent problem, but somehow we did not feel reassured.

. . .

Director McNutt’s evasions suggest the truth of a recent comment by the nation’s first Secretary of Energy, James Schlesinger: “The peak oil debate is over… the peakists have won.”9 More ominously, it suggests that officials in positions of national responsibility cannot or will not level with the public. Oil is indeed a precious commodity, but false reassurances that “all is well” threaten to deprive us of other precious commodities: the time and the will to begin the necessary adaptation to oil’s increasing scarcity before it is too late to avoid a major crisis.

O'Reilly doesn't get it either, or he wouldn't be getting it if he came to this conclusion by himself rather than simply reading the scripted talking point:

Quote :

O'Reilly wrote:

However, if the Obama administration wanted to, it could ask Congress to raise export taxes on the oil companies to encourage them to sell their products here. Think about it. The oil companies are regulated by the federal government. They can't drill on land nor in American waters without permission from the feds. Many Republicans want to drill baby drill but what's the point if all the oil goes to China? Increased production obviously doesn't mean lower prices for us.

Here is the reason his proposal would have zero impact on gas prices, and would in fact accelerate the closure of U.S. refineries. O'Reilly believes that U.S. oil companies are drilling for oil, producing gasoline, and shipping that overseas (or simply shipping the crude overseas). As shown above, net imports of crude oil are still 9 million barrels per day -- a number that has not changed much in the past few years. It is the finished products that are being exported -- not crude oil -- and these finished products are being made from imported oil. We have oil refiners like Valero -- who don't actually produce oil at all, but import oil from countries like Mexico and Brazil, refine it, and ship gasoline back to them. Between just Mexico and Brazil (and there are others), we are importing 1.5 million barrels of oil per day, and sending them back about a million barrels a day of finished products. (Some of the oil we get from them does stay in the U.S. as finished products). If you subtract our finished product exports from our oil imports, you still end up with net imports of crude oil and crude products of 8 million barrels per day. Hence, the U.S. still operates at a significant import deficit, which contradicts claims that we have plenty of oil and gas in the U.S.

. . .

Bill O'Reilly is promoting a false belief: that the U.S. is awash in oil and that gasoline prices are high because we are shipping gasoline overseas instead of selling it domestically. The truth is that the U.S. does not produce nearly enough oil to meet our fuel demands, but we import about a million barrels a day more than we need and export some of the excess as finished products, creating jobs and helping the balance of trade in the process. The reason we are doing this is that domestic demand for gasoline has fallen in recent years, and refiners can therefore either close more refineries or they can find other markets for their products. Thus the main reason to reject O'Reilly's idea is simply because it is based on a false notion. He would do a great service to his viewers if he clarified the situation.

So, yeah... Here's to hoping we don't hit $5 a gallon this summer.

It's interesting to see someone like yourself who is very knowledgeable about the threat AGW poses to hope against higher gas prices. As gas prices rise, cleaner,renewable sources of energy become financially viable.The countries who come up with energy technology solutions will be the economic winners in a world of declining oil production.$5 gallon gas is done deal this summer and it will speed up the pace of change in the automotive industry. The faster we deal with our addiction to oil, the better off we'll be.

Here's another article on why high gas prices are here to stay:

Quote :

Oil prices are now higher than they have ever been — except for a few frenzied moments before the global economic meltdown of 2008. Many immediate factors are contributing to this surge, including Iran’s threats to block oil shipping in the Persian Gulf, fears of a new Middle Eastern war, and turmoil in energy-rich Nigeria. Some of these pressures could ease in the months ahead, providing temporary relief at the gas pump. But the principal cause of higher prices — a fundamental shift in the structure of the oil industry — cannot be reversed, and so oil prices are destined to remain high for a long time to come.

In energy terms, we are now entering a world whose grim nature has yet to be fully grasped. This pivotal shift has been brought about by the disappearance of relatively accessible and inexpensive petroleum — “easy oil,” in the parlance of industry analysts; in other words, the kind of oil that powered a staggering expansion of global wealth over the past 65 years and the creation of endless car-oriented suburban communities. This oil is now nearly gone.

The world still harbors large reserves of petroleum, but these are of the hard-to-reach, hard-to-refine, “tough oil” variety. From now on, every barrel we consume will be more costly to extract, more costly to refine — and so more expensive at the gas pump.

Those who claim that the world remains “awash” in oil are technically correct: the planet still harbors vast reserves of petroleum. But propagandists for the oil industry usually fail to emphasize that not all oil reservoirs are alike: some are located close to the surface or near to shore, and are contained in soft, porous rock; others are located deep underground, far offshore, or trapped in unyielding rock formations. The former sites are relatively easy to exploit and yield a liquid fuel that can readily be refined into usable liquids; the latter can only be exploited through costly, environmentally hazardous techniques, and often result in a product which must be heavily processed before refining can even begin.

The simple truth of the matter is this: most of the world’s easy reserves have already been depleted — except for those in war-torn countries like Iraq. Virtually all of the oil that’s left is contained in harder-to-reach, tougher reserves. These include deep-offshore oil, Arctic oil, and shale oil, along with Canadian “oil sands” — which are not composed of oil at all, but of mud, sand, and tar-like bitumen. So-called unconventional reserves of these types can be exploited, but often at a staggering price, not just in dollars but also in damage to the environment.

sparks wrote:

It's interesting to see someone like yourself who is very knowledgeable about the threat AGW poses to hope against higher gas prices.

Couple of things. First, we're completely hosed in terms of AGW, especially if we're waiting for green energy to come online and reduce our emissions. That doesn't deal with the CO2 that's already there and the warming physics ensures we'll see over the next decade or so as a result. We're already seeing resource shortages all over the world, extreme weather conditions that are reducing crop yields, etc. Switching to zero emission green energy tomorrow wouldn't stop it, and we'd still see increasing effects of warming for years to come due to the inherent time delay in the carbon cycle.

Now as far as the energy crisis, we need cheap energy, not just alternatives, which is exactly what we're not going to get if alternatives only become economically viable once gas becomes too expensive. High energy prices hurt the economy, making innovation even more difficult. We still don't have anything with an EROEI close to oil, and we still don't have anything scalable to the national level.

The free market won't save us because oil, despite being so awfully expensive for the average American driving to work each day, is still pretty damn cheap, and it doesn't care about the environment. The price point we have to get to in order for the market to innovate alternatives is past the point we'd need to function as a growth based economy. Remember the "oil shock" wargames the Pentagon was playing back in 2005 or so? Where prices got so high they caused an economic standstill and uncontrollable recession? We haven't come very far since then (or from the 70s). A handful of new electric vehicles still ceaselessly mocked by conservatives? What good is a fleet of new vehicles going to do if so many Americans are out of work or are having difficulty just making house payments? They're definitely not going to flying out of the dealerships, especially if they're already having a hard time filling up their existing vehicle.

Ignoring, too, that we're still growing, which makes any discussion of alternatives moot.

I don't believe that we are "hosed" by AGW. The people that are impacted the most by AGW are the people in third world countries who barely survive now. IMO,most Americans. have the resources to mitigate the effects of AGW. I also think you are underestimating how quickly we can retool and produce electric vehicles as they make sense financially by the rising cost of gas. Toyota has sold over 2 million hybrids since they were introduced in 1997. I believe electric cars will hit 2 million in sales by 2020.To be honest with you, the market could care less about what brain dead conservatives think about EV's. The fact is the automakers who don't respond to the changing environment are going to end up like Polaroid. The other issue I don't see you addressing in your comments about gas prices and economic growth are the external costs of not reducing our fossil fuel use. These costs include AGW,health impacts like cancer and respiratory diseases,species depletion and environmental damage. IMO, in spite of the insanity being spouted by the current group of Tea Party whack jobs and the religious right, most Americans realize that polluting the air and water isn't a path that will lead to growth or happiness.

spark wrote:

I believe electric cars will hit 2 million in sales by 2020.

In 8 years. That's a *long* time to replace a mere 1% of our gas fleet. Those numbers aren't very reassuring.

spark wrote:

The other issue I don't see you addressing in your comments about gas prices and economic growth are the external costs of not reducing our fossil fuel use. These costs include AGW,health impacts like cancer and respiratory diseases,species depletion and environmental damage.

Because it's irrelevant to my point. And that is, very simply - I don't think we'll get to a point where alternatives are economically viable before the price of gas puts us into another recession. We still need cheap energy to function, alternative or not, that's why I'm not cheering for $5/gallon gas.

Heretic wrote:

spark wrote:

I believe electric cars will hit 2 million in sales by 2020.

In 8 years. That's a *long* time to replace a mere 1% of our gas fleet. Those numbers aren't very reassuring.

spark wrote:

The other issue I don't see you addressing in your comments about gas prices and economic growth are the external costs of not reducing our fossil fuel use. These costs include AGW,health impacts like cancer and respiratory diseases,species depletion and environmental damage.

Because it's irrelevant to my point. And that is, very simply - I don't think we'll get to a point where alternatives are economically viable before the price of gas puts us into another recession. We still need cheap energy to function, alternative or not, that's why I'm not cheering for $5/gallon gas.

After reading all the informative links and posts you have made about AGW, it's kind of shocking to me to see you make posts about us needing "cheap" energy.What we need are cleaner, more sustainable ways to generate electricity. The countries that dominate the next century economically will be the ones who master clean sustainable energy technology. As demand for energy jumps as third world countries thirst for our lifestyle, energy technology will create the same kind of explosion wealth creation that IT during the twentieth century.

The Myth of “Saudi America”

Quote :

Straight talk from geologists about our new era of oil abundance.

The popularity of the abundance narrative waxes and wanes, and its current ascendance comes primarily on the heels of a report by Leonardo Maugeri, a former oil-industry chief and currently a fellow at Harvard's Belfer Center. When his cornucopian fantasy came out, I smelled a rat (or at least a not-too-deeply buried fish). But the International Energy Agency jumped on the bandwagon with breathless, and equally fishy, forecasts of the coming “Saudi America.” Most of the media swallowed the story hook, line, and sinker, with even the usually sober Economist rising to the bait.

So what's wrong with this story? Maugeri's problems begin but don't end with an arithmetic blunder so dumb (he compounded a percentage decline incorrectly) it would make even Steve Levitt blush. The geeky geological stuff discussed at the AGU session is more interesting and ultimately more damning. The geological considerations expose a number of common threads of faulty reasoning that pervade the current crop of starry-eyed projections of endless oil abundance.

There are certainly huge amounts of oil locked up in shale formations worldwide. In the United States alone, the Bakken and Eagle Ford shales contain up to 700 billion barrels, and the Green River shale under Colorado, Wyoming, and Utah has a whopping 2 trillion barrels. However, only a tiny fraction of this total is recoverable. For Bakken (in Montana and North Dakota) and Eagle Ford (in Texas), which account for most of the current surge in U.S. oil production, the estimated recoverable fraction ranges from 1 to 2 percent. Though all of these deposits are loosely referred to as “shale oil,” Bakken and Eagle Ford oil is more precisely called “tight oil,” because it is actual, fluid oil that is trapped in the pores of shale, and it can be liberated by fracturing the rock to allow the oil to flow. In contrast, the hydrocarbon in the Green River shale is not really oil at all but a waxy substance that must be cooked at around 500 degrees Celsius to turn it into flowing oil. The technology for extracting oil from deposits like the Green River shale is far more challenging than what is required to tap into tight oil, and it has never been profitably implemented at any significant scale. There is thus no credible estimate of how much oil can be recovered from the Green River formation.

At the high end of the estimates, predicted production from Bakken and Eagle Ford together amounts to perhaps a two-year oil supply for the United States at 2011 consumption rates. That's significant but not a game-changer. Even if it were to prove possible to achieve production rates comparable to those of Saudi Arabia, that would only mean that we would deplete the resource faster and bring on an oil crash sooner.

Still no good news.

This shit is still too fucking expensive and resource intensive to extract and make a profit.  

U.S. officials cut estimate of recoverable Monterey Shale oil by 96%

Quote :

Federal energy authorities have slashed by 96% the estimated amount of recoverable oil buried in California's vast Monterey Shale deposits, deflating its potential as a national "black gold mine" of petroleum.

Just 600 million barrels of oil can be extracted with existing technology, far below the 13.7 billion barrels once thought recoverable from the jumbled layers of subterranean rock spread across much of Central California, the U.S. Energy Information Administration said.