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Saturday, July 28, 2007

Why gas is expensive

A news blurb from The Economist's "Business this week" on the merger of oil and gas drilling companies Transocean and GlobalSantaFe contained this tidbit:

The rents for oil rigs have been rising fast thanks to the scramble for deepwater oil reserves; some are leased out for as much as $500,000 a day.


Incredible. If oil is $70 a barrel, then an oil rig like this would need to extract more than 7,000 barrels a day just to pay this rent charge. And with rent charges like this, it's no wonder oil and gas cost so much.

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