Is oil shale finally economically competitive?

With crude oil consistenly over $40.00 per barrel for a year now and growing demand for petroleum in China and India it may be. This seems to be an interesting problem in supp;y and demand. As long as supply is low and demand high for petroleum the price will be maintained at its current or higher levels. This makes oil shale a viable alternative. If we (the worlds largest consumer of petroleum) cut our demand for petroleum then demand decreases and prices should drop, which reduces the atrractiveness of extraction fuels. Do we then close up all our oil shale production and but the cheaper crude until prices climb again or do we view this as a vital industry and install price supports / subsisdies. Will the WTO let us subsidize production? HMMM the things you wake up thinking about at 0400.

From Wikipedia:

Reserves
Estimates vary as to how many barrels of oil are contained in oil shale reserves. The US Office of Naval Petroleum and Oil Shale Reserves estimates there are some 1.6 trillion barrels of oil contained in oil shales around the world, with 60–70% of reserves (1.0–1.2 trillion barrels) in the United States. Most US oil shale is concentrated in the Green River Formation in Wyoming, Utah and Colorado. These oil shale resources underlie a total area of 16,000 square miles (40,000 km²).

Estonia has some five billion tonnes of oil shale reserves.

The Australian Geological Survey Organization estimates that the country has 32–37 billion tonnes of oil shale, equivalent to 220–260 billion barrels of oil.

Canada has 178.8 billion barrels of oil and is distributed throughout the country.

Germany has reserves equivalent to three billion tonnes of oil shale.

Israel has more than 15 billion tonnes of lean oil shale, equivalent to about 5 billion barrels of oil. The cost of extracting distillates from oil shale was estimated in 1999 to be about 27 US dollars per barrel.

Economics
Below forty dollars a barrel, oil-shale oil is not competitive with conventional crude oil. If the oil price were to stay permanently at over forty dollars a barrel (with no chance of declining, which could be the case if oil shale were to be exploited on a large enough scale), then companies would exploit oil shale. Generally, the oil shale has to be mined, transported, retorted, and then disposed of, so at least 40% of the energy value is consumed in production. Water is also needed to add hydrogen to the oil-shale oil before it can be shipped to a conventional oil refinery. The largest deposit of oil shale in the United States is in western Colorado (the Green River Shale deposits), a dry region with no surplus water. The oil shale can be ground into a slurry and transported via pipeline to a more suitable pre-refining location.

During the oil crisis of the 1970s, people thought that oil supplies were peaking, expected oil prices to be around seventy dollars a barrel for some time to come, and invested huge amounts of money in refining oil shale — money that they lost. Because of the astronomical sums that were lost last time around there is considerable reluctance to invest in oil shale this time around. Investors are waiting to see if oil prices really will remain this high (in mid-2005: US$60+). Prices are rising because of increased demand in rapidly developing countries, particularly China. Will high prices result in the discovery of more oil, as happened in the seventies, or will alternatives to drilling for oil have to be developed? Investors, burnt badly in the 1980s for their enthusiasm of the seventies, are in no hurry to develop oil shale. Those who lost money then are inclined to believe that more oil will be found by and by.

In 2005, Royal Dutch Shell announced that its in-situ extraction technology could be competitive at prices over $30/bbl [2].

China is challenged severely by high oil prices. The Chinese government has sponsored a project to extract oil from shale.