Monday, February 11, 2008

Oil Sands

"Alberta estimates that the province has 174 billion barrels of recoverable bitumen, making Canada's oil reserves second only to those of Saudi Arabia. ... The turning-point came around four years ago, when crude began its rally and oil sands became economic. ... Richard Gusella, chief executive officer of Connacher Oil & Gas Ltd says he paid $20 per acre for land near Fort McMurray in January 2004, when oil cost $30 a barrel. 'In October, crude went up to $60 and the price of land went up to $2,000-$4,000 an acre', he says. ... Five years ago, an average home in Fort McMurray cost $350,000. Now it is more than $600,000. ... Faced with simmering public anger at Big Oil's soaring profits, Alberta last year increased the royalites oil producers have to pay the provincial government", WSJ, 5 February 2008.

Price drives cost. "Excess" profits by oil companies will be taxed or competed away. See my 24 December 2007 post.

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