[lbo-talk] Production costs behind old prices

[Tim Francis-Wright]

Eubulides wrote:
> Then again, part of that story may be the manufacturers that make the
> gear to make extraction possible could have just jacked up their
> prices for replacement parts and the new equipment that's being
> installed via new investment.

One thing that has impressed me (and not in a good way) is that the run-up
in crude oil prices has encouraged oil companies to step up extraction of
oil from tar sands.  The process means cooking huge amounts of material
at high temperatures and requires big energy inputs per barrel of oil.
(See http://en.wikipedia.org/wiki/Tar_sands for the gory details.)
As long as prices are high, tar sands are the easy (but expensive) way
to keep production up, and Shell, ConocoPhillips, Chevron, and Exxon
are all involved in the Canadian deposits.  Why bother exploring for
new sources, getting more from existing wells, or starting to get serious
about alternatives when there is nothing but boreal forest in northern
Alberta in your way?

--tim francis-wright