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Subsidies for Oil Shale Development: Billion-Dollar Boondoggle?

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GRAND JUNCTION, Colo. - As Congress looks to avoid the looming "fiscal cliff," opponents of a proposal recently introduced in Congress (H.R. 6603) to provide more subsidies for oil shale development say it is a waste of tax dollars. Jim Spehar is a former county commissioner, city council member and mayor, who also served as president of the Colorado Municipal League. Spehar says the latest proposal out of Washington, D.C., would spend $50 million to undertake what is already being done without taxpayer money.

"Which would be essentially on the same topics that the companies that have seven research and development test plots on federal land are also charged with doing. So it's a duplicative effort, I'd submit, and unnecessary - and hasn't been asked for by the industry."

If the government needs to prop up oil shale development, Spehar says it should put that funding toward helping communities near the oil shale deposits prepare and pay for the impacts on municipal services and infrastructure.

"The major impacts come in the construction phases of plants and facilities, before there are any royalties assessed and before there are any local property taxes collected, so it's very problematic for these communities."

The problems and downfalls associated with oil shale are described in a recent report from the group Taxpayers for Common Sense. Senior program director Autumn Hanna says its analysis found that the government has spent billions over the decades, but oil shale is still not commercially viable.

"It's not feasible to extract the oil from shale in a cost-effective way at this point. And really, if the industry does think it's the way to go, we encourage them to invest their own money. We don't think any more federal subsidies should be provided for oil shale technology."

Oil shale is a rock that must be superheated for several years and processed in order to be used as a fuel source. It is not to be confused with shale oil, which is liquid trapped in the rock that can be extracted. Shale oil is one of the most profitable energy sources being developed today.

The entire report on oil shale subsidies can be found at