The Bush administration proposed rules [PDF] for U.S. oil shale development Tuesday that include charging lower royalty rates for oil-shale production on public lands than it does for other oil and gas drilling. The lower royalties are meant to encourage oil-shale production since, as it turns out, the energy- and pollution-intensive process of cooking rocks before pumping out the resulting oil is still up to three times more expensive than extracting already-liquid oil. “It is basically recognition that in the beginning there has to be a lower royalty to recognize the pioneering nature of this business,” said the executive director of the National Oil Shale Association. Interior Secretary Dirk Kempthorne had a different take on the economics of oil-shale development, saying the high costs of production are finally beginning to make sense. “For years, the cost of extracting oil from shale exceeded the benefit, but today that calculus is changing.” (Thanks, high oil prices!)
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