Is shale oil cheap?

Just a quick note here based on some information I have been hearing about shale oil. If you recall, I wrote a primer on peak oil a week or so ago. The crux of that post was that it is not a question of our running out of oil but rather of our running out of cheap oil. And that has economic implications since we are at a point where oil prices are high enough that people begin to cut back on consumption, so-called demand destruction.

Some anecdotal evidence suggests that the nonconventional oil we are seeing pop up is more expensive to extract. An example is the Bakken shale oil fields in North Dakota. Hess Corp has warned that its oil production output from the Bakken fields would fall short of its 2012 target.

“While we expect the monthly average to continue to increase throug...


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