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The Oil Shale Funding Mirage

Getting energy from oil shale is a half-baked idea.  Literally.

Getting energy from oil shale is a half-baked idea.  Literally.

Oil shale, also known as kerogen, is a waxy pre-petroleum substance found in rock layers in Colorado, Utah and Wyoming.  Unlike pools of oil in the ground, it can't be turned into liquid fuel for transportation unless it's baked to 700 degrees.  And no company in the U.S. has been able to develop a process that turns it into oil in a way that actually makes money, despite a century of trying.  No wonder oil shale has been mocked as the "fuel of the future - because it always has been, and always will be."

Because of the technological and economic challenges, oil shale is putting as much liquid fuel into U.S. markets as it did in the early 1900s.  Which is to say:  zero.

Even ignoring the technological barriers, there are the environmental problems.  Oil shale could be the dirtiest carbon polluter of any petroleum fuel.  It may require huge amounts of water in the arid West, where rivers like the Colorado are parched by current use and further threatened by climate change that may dry them out further.

It was thus heartening when, earlier this month, the Department of the Interior announced a cautious proposal for oil shale development that prudently limits the use of America's public lands to research.  Which is the only thing industry in the West is doing now anyway.

But such a reasonable approach is anathema to the "Bulldoze here, pollute now" crowd and their allies in Congress, who promptly moved to get the House of Representatives to consider a bill that would force the U.S. government to sell commercial oil shale leases on tens of thousands of acres of public lands.  For a product that no one in this country has figured out how to make.

The most intellectually dishonest part of the so-called "PIONEERs Act" oil shale subsidy bill is that it was initially touted as a way to make generate revenue to fund badly needed federal transportation project.  The theory being that the U.S. coffers will fill with gold when oil shale developers remit billions in revenues from sales of oil shale mined from public lands and refine it into fuel.

But almost no one - even in industry - thinks that oil shale will be turned into a saleable product here in the next 10 years.  So the non-partisan Congressional Budget Office unsurprisingly found that the revenue stream from royalties on oil shale production would be - wait for it - $0 over the next decade. (Rep. Jared Polis of Colorado led a valiant effort to call BS on this approach in the House - kudos to him for his effort.)

There may be compelling arguments in favor of oil shale development.  But paying for transportation projects - or anything else - in the next decade ain't one of them.  Until someone can figure out how to bake rock and turn it into oil economically without sucking rivers dry or polluting the West's air, oil shale as a way to run our cars will, and should, remain a mirage.