Fill 'er Up With Oil Sands!

by Michael Fumento - 10/31/2005 - Tech Central Station

It was a tenet of the late great economist Julian Simon that we'll never run out of any commodity. That's because before we do the increasing scarcity of that resource will drive up the price and force us to adopt alternatives. For example, as firewood grew scarce people turned to coal, and as the whale oil supply dwindled 'twas petroleum that saved the whales.

Now we're told we're running out of petroleum. The "proof" is the high prices at the pump. In fact, oil cost about 50% more per barrel in 1979-80 than now when adjusted for inflation. Yet it's also true that industrializing nations like China and India are making serious demands on the world's ability to provide oil and are driving prices up. So is this the beginning of the end?

Nope. The Julian Simon effect is already occurring.

I have long argued to those who claim that we need to stop using oil (you know, the chicken little extremists who insist that we are running out of it) that cheap energy will expand the availability of oil for hundreds of years. The enviro-extremists who insist that we have to destroy our economy so that the world can "survive", never can explain how it is that the best environments are the developed countries, and not the impoverished countries that they wish us to emulate.

This article gives us the newest numbers on the cost of using the vastly greater supplies of oil sands. It has long been known that oil sands can be converted to oil at a costs of less than $75 a barrell. This article claims that number has dropped to less than $15 a barrell. At that price, we should start to see the price of oil drop, as more and more of the countries with huge oil sand reserves start to utilize their great suppplies to compete directly wtih oil.