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To: Brilliant
The real question is not the time, which is just starting up, but the capital investment required. But that goes into the price calculation, and the claim is the answer is $30. Which is a perfectly believeable figure. German synthetic gas from coal in WW II cost about $60. Naturally, when you can get oil out of the ground in Saudi Arabia for $3, it does not make sense to pay $30 for extraction, if the Saudis meet demand. But then, if they meet demand, the price shouldn't be $70 when the cost is $3. If they don't meet demand, you can cap prices by just putting enough of this online, and paying for supplimental shale oil whenever prices go above the cost.
68 posted on 09/03/2005 4:37:37 PM PDT by JasonC
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To: JasonC
JasonC said: "But then, if [the Saudis] meet demand, the price shouldn't be $70 when the cost is $3."

The cost of producing Saudi oil is only $3 per barrel but the value of their as yet untapped reserves is more than that by quite a bit. That is why they can deliver oil at a profit.

The prospect of producing oil from shale in the US for $30 per barrel also explains why it is unlikely that world oil prices can remain as high as they are. How much shale oil will be produced if the world price of crude falls to $28? Practically none.

I believe that it is impossible for the US to reduce its dependence on foreign oil as long as the Saudis continue pumping.

87 posted on 09/03/2005 7:14:06 PM PDT by William Tell
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