Review and evaluation of costs and benefits from various oil shale strategies. Final report
The first objective of this study is to compare and contrast the revenue streams that would accure to public treasuries from hypothetical oil shale and petroleum production operations. The second objective is to analyze five incentive mechanisms targeted toward oil shale development and determine the attractiveness of each incentive from the investor's and the governments standpoint. The five incentives considered in this study are: (1) Alternative Energy Production Credit (2) Capital Recovery Act 1979 (3) Price support (4) Guaranteed Purchase and (5) the Additional 10% Investment Tax Credit. In the absence of Federal incentives, public revenues from petroleum production exceeded the revenues from oil shale production. The revenue difference between the two processes was due to the depletion allowance and the higher operating costs associated with an oil shale operation. When comparing each oil shale incentive mechanism and assuming that all costs escalated at the same rate in the future, the Capital Cost Recovery Act and the Additional 10% investment tax credit provide the greatest increase in project discounted cash flow rate of return for a given net present value cost to the Federal Government. If the market price of oil shale increases at an assumed rate of 2.5% per year faster than inflation, then the price support and guaranteed purchase incentives are the most attractive from the government's standpoint. These incentives would even provide the government with a net positive return. From the project sponsor's standpoint the price support and guaranteed purchase incentives increases project economics favorably and reduces the risk involved in proceeding with the project due to price uncertainties.
- Research Organization:
- Kearney (A.T.), Inc., Alexandria, VA (USA)
- DOE Contract Number:
- AM01-78RG03365
- OSTI ID:
- 6381411
- Report Number(s):
- DOE/RG/03365-T1; ON: DE85000459
- Country of Publication:
- United States
- Language:
- English
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Related Subjects
020700 -- Petroleum-- Economics
Industrial
& Business Aspects
04 OIL SHALES AND TAR SANDS
040800* -- Oil Shales & Tar Sands-- Economics
Industrial
& Business Aspects
CAPITAL
COST
DEPLETION ALLOWANCES
FINANCIAL INCENTIVES
INDUSTRY
OIL SHALE INDUSTRY
OPERATING COST
PETROLEUM INDUSTRY
PRICES
PRODUCTION
TAX CREDITS
TAXES