One thing people often forget, or perhaps they don’t even realize at all (I was amazed) is that the US have massive reserves of ‘oil shale’, a fine grained rock that contains oil – different from crude oil, but liquid hydrocarbons can be extracted from it.
In fact, through their oil shale, the US has the biggest oil reserves in the world!
The worlds proven regular (crude) oil reserves stands at around 1.3 trillion barrels, but there are around 3 trillion barrels of extractable oil from shale around the world. What’s more, the US have around 2/3 of that world resource, mostly in the Green River Basin.
So, the US have 2 trillion barrels of oil, in the form of shale – more than the entire world supply of crude oil, which stands at 1.3 trillion barrels!
The problem prior to the recent oil price rise, has been the cost of extracting and processing the shale was much higher than the price of oil itself. So, it was not economically viable to produce and not really considered as a reserve. I think the cost of producing a barrel of oil from the shale was around US$70–100 in 2005.
But, with oil at $140 a barrel, shale oil can now be produced and a good profit made.
Furthermore, with improved technology and more scale, the production costs are dropping quickly and I read somewhere that it may be as low as $50 per barrel now and it could drop to $30 a barrel within a decade.
So, if oil goes up to $200 per barrel over the next decade, then the US stand to profit $170 per barrel from 2 trillion barrels they have in shale form.
This dwarfs the reserves in Saudi Arabia!
So, with the biggest oil reserves on the planet, the US can become the biggest oil producer out there, but only if it is economically viable through high oil prices.
Which country’s governement REALLY wants high oil prices?
It’s the US…