Do you work in investors relations for an oil sands company or a junior? Your argument sounds very familiar to me.

There may well be lots of oil in Alberta. There are lots of places in the world with lots of things. Getting them into production costs hundreds of millions at the least and often billions. That requires outside finance. There is very little of that floating around these days. The returns on oil sands are probably not there.

Please do not use the idea of economies of scale in this context. It does not work. Joe Bloggs can be sold things. Industrial consumers buy things.

Does that not depend on the price of oil? The likes of Shell seem to think there is opportunity to make money there.............

True but size is not everything.

According to my spam it is.

That a 15 year period is too short a data series to draw any statistically significant inference.

Moreover, if you insist on concentrating on the last few years, note the point made in the link I posted that the coldest year so far in the 21st century (2008) was warmer than every year in the whole 20th C with the exception of two (1997 & 1998) which of course were rather near the end of last century. Put another way, only one year (1999) in the last 15 failed to be warmer than any previous year in recorded history.

Looks like the Met Office were interested in answering this question......

http://www.metoffice.gov.uk/research...use-in-warming

Quite frankly, I think I answered the question better than the Met Office's public relations guy who wrote the blurb in that.

If you bothered to read the three papers referenced therein you'd agree.

Of course it does. It's got to be one of the most obvious contexts in which it does work, the extraction of natural resources, my memory is a bit rusty but didn't Adam Smith mention that in his book? Oil tankers are one of the classic examples of economies of scale.

Obviously the fixed cost of a pipeline is mitigated by the amount of oil you get to send through it, so the more oil at the sending end, the greater the economy of scale.

I can't actually think of a simpler example of an economy of scale.

Precisely why the amounts there matter, which means the more there is the greater the ability to engage in economic specialization in the extraction process, because of the economies of scale.

Your argument works in some cases. For example, a Valemax VLOC can be about ten times bigger than a Handysize bulker but it doesn't need ten times the crew or use ten times the fuel.

In the case of resources, merely having a lot of something is no guarantee of success. I can think of one case. A mining company in Australia has two of the world's biggest deposits of a particular commodity and until fairly recently was supplying about two thirds of world demand. It had all the economies of scale you could want. It is not producing these days. Mining costs, particularly labour costs, have risen sharply in recent years and even though the company was selling at contract prices well above spot market prices, it was losing money on every tonne it sold. It has mothballed its industrial-scale mining operations and meets its processing obligations with raw materials it buys in from much smaller producers, some of which are little more than pick & shovel outfits.

It's the same with rare earths. Every mining junior and his dog has a huge deposit of rare earths. Very few, if any, will come into production. Why? Because the world doesn't need any more rare earths, that's why.

The Uk is having the first decent summer for about 6 years. It's been increasingly stormy, wet and windy with prevalent flooding. The seasons are getting earlier. Spring is almost a month early, summer is in spring and autumn starts almost as soon as the schools break for summer hols.
Here in BC people have been saying how the last four or so years have been windier, and the start of summer isn't as distinct as it normally is, and the seasons here seem to be getting later. June being worse, and September being lovely.
My friend was in Hawaii recently and asked a local if the week of stormy weather was normal. The local said the past 4 or so years, the winds have been increasingly high and unpredictable.
Our weather is becoming stormier, wetter, and windier. The seasons are changing, becoming less defined.
There is definitely something happening Globally!

Summer of 2011 was an absolute beauty.

Wot summer? we had a spring! And that's all she wrote!

But it is a guarantee of economies of scale, which was my point. It doesn't necessarily mean that the cost savings will be sufficient to turn a profit though. But there will be cost savings.

Because the economies of scale are not yet sufficient enough to make them profitable. Eventually you reach a low enough price point that the marginal utility is sufficient to extract it.

People used to say the same thing about the oil sands, not the least of which were the oil companies in Alberta, why dig up the oil sand and steam the oil out of it when we can pump the stuff out of the ground?

What changed was that the marginal utility of oil increased partly because of demand, partly because people figured out ways of doing it that increased the economies of scale, and partly because they ran out of oil to pump out of the ground, making it profitable based on the current marginal utility.

They seem pretty pleased with themselves.............

http://www.calgaryherald.com/busines..._lsa=fda0-412a

http://www.cbc.ca/news/canada/calgar...oric-week.html

Seems like Calgary has been flooding long before the oil sands came along.