Shale oil is sham
The Albuquerque Tribune: Columnists
Drilling is costly and nets just 25 gallons of oil per ton of shale
By V.B. Price
Tribune Columnist
October 22, 2005
When you hear about digging up huge areas of Utah, Colorado and Wyoming to develop shale oil, it starts you thinking about the true nature of the so-called free market - guided, we are told, by the almost divine rationality of supply and demand.
But the more you look at energy prices, the hope for energy sustainability and recent market-gaming by energy companies during the blackouts of 2001-03 in California, the more it must dawn on even fiscal conservatives that the free market is mostly a hoax these days and that supply and demand is rigged by government incentives and distorted marketing.
To extract "possibly" a trillion barrels of oil locked in the rocks along the Green River in Utah, the Flaming Gorge National Recreation Area in Wyoming and along parts of the Colorado River in Colorado, countless billions of tons of shale will have to be dug up, the oil burned out of it at high temperatures, countless tons of salty wastes kept from indispensable rivers and ground waters - and all for about 25 gallons of oil per ton of shale.
Shale oil becomes financially rational if the price of a barrel of oil is more than $35 or so. And the higher, the better.
Is shale oil a rational substitute for aggressive conservation of oil through ultra-light vehicles, hybrid engines and alternative fuels? Is it the kind of thing to build a sustainable energy economy on, considering its environmental hazards? Is sustainability itself a rational goal in the eyes of the market?
Not that I can tell.
The rationality of supply and demand is destroyed when false demand is induced by voracious advertising and saturating the marketplace with goods nobody needs until they are told to want them.
Was the American auto industry responding to a legitimate demand from consumers for SUVs? No. Such a product was not even a category of possibility until the market was flooded with them, greased with the economic oil of advertising.
We all saw the rationality of the market at work in California, when "gaming the market" allowed companies such as Enron to manipulate the supply of deregulated wholesale electric energy, causing millions of people to go without power.
As former Enron CEO Ken Lay said of California's futile effort to protect consumers, "It doesn't matter what you crazy people in California do, because I got smart guys who can always figure out how to make money." Enron, of course, went bankrupt.
It's never wise to be cynical, even about such obvious nonsense as the free market. But it's even stupider not to build an awareness of greed and flagrant criminality into our assessment of the future.
If we stagnate in a prolonged recession because of energy prices, it will not be because of the pure rationality of supply and demand.
Price is an Albuquerque freelance writer, author, editor and longtime commentator.
Drilling is costly and nets just 25 gallons of oil per ton of shale
By V.B. Price
Tribune Columnist
October 22, 2005
When you hear about digging up huge areas of Utah, Colorado and Wyoming to develop shale oil, it starts you thinking about the true nature of the so-called free market - guided, we are told, by the almost divine rationality of supply and demand.
But the more you look at energy prices, the hope for energy sustainability and recent market-gaming by energy companies during the blackouts of 2001-03 in California, the more it must dawn on even fiscal conservatives that the free market is mostly a hoax these days and that supply and demand is rigged by government incentives and distorted marketing.
To extract "possibly" a trillion barrels of oil locked in the rocks along the Green River in Utah, the Flaming Gorge National Recreation Area in Wyoming and along parts of the Colorado River in Colorado, countless billions of tons of shale will have to be dug up, the oil burned out of it at high temperatures, countless tons of salty wastes kept from indispensable rivers and ground waters - and all for about 25 gallons of oil per ton of shale.
Shale oil becomes financially rational if the price of a barrel of oil is more than $35 or so. And the higher, the better.
Is shale oil a rational substitute for aggressive conservation of oil through ultra-light vehicles, hybrid engines and alternative fuels? Is it the kind of thing to build a sustainable energy economy on, considering its environmental hazards? Is sustainability itself a rational goal in the eyes of the market?
Not that I can tell.
The rationality of supply and demand is destroyed when false demand is induced by voracious advertising and saturating the marketplace with goods nobody needs until they are told to want them.
Was the American auto industry responding to a legitimate demand from consumers for SUVs? No. Such a product was not even a category of possibility until the market was flooded with them, greased with the economic oil of advertising.
We all saw the rationality of the market at work in California, when "gaming the market" allowed companies such as Enron to manipulate the supply of deregulated wholesale electric energy, causing millions of people to go without power.
As former Enron CEO Ken Lay said of California's futile effort to protect consumers, "It doesn't matter what you crazy people in California do, because I got smart guys who can always figure out how to make money." Enron, of course, went bankrupt.
It's never wise to be cynical, even about such obvious nonsense as the free market. But it's even stupider not to build an awareness of greed and flagrant criminality into our assessment of the future.
If we stagnate in a prolonged recession because of energy prices, it will not be because of the pure rationality of supply and demand.
Price is an Albuquerque freelance writer, author, editor and longtime commentator.
posted by Marcel at 1:51 PM
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