Eli has been remarking about the Keystone Pipeline environmental report from the US State Department that people, except chemical kineticists, are very bad at rate problems. Tar sand oil is expensive. Building the pipeline will decrease the cost of mining the tar sand oil, which will make it more competitive. If the pipeline is NOT built then investment into tar sand mining will be lower as the profit would be smaller. QED the effect of building or not building the pipeline will be substantial.
In short, that means that sand in the gears that raise cost discourages investment, especially investment into things with small profit margins and long payouts. On Jan 30, the Wall Street Journal reported on a splendid example thereof. Royal Dutch Shell Oil's new president, Ben van Beurden, is repositioning the company, to guess what, make more money. As part of this
Shell will suspend plans to drill in the Alaskan Arctic after a federal appeals court ruled last week that the U.S. government improperly relied on "inadequate information" in the process of awarding licenses for exploration there. The Arctic plan—which has cost Shell about $5 billion in permits, personnel and equipment since 2008—has faced delays due to sea ice and a drilling rig that ran aground. The government fined Shell $1.1 million for Clean Air Act violations by rigs during the 2012 drilling effort. "The lack of a clear path forward means that I am not prepared to commit further resources for drilling in Alaska in 2014".Shell has been very agressive about long term capital investments, not only in Alaska, but in Louisiana (a gas to diesel plant), Kazakhstan, Canada and world wide. Within the company this set up a tension between those who thought that salvation lay in new sources and new investments and those whose focus was on the bottom line. The problem with big bets is that they lose, and when they do, they lose a lot of money. The hit to the bottom line has been huge (no, Shell is not losing money yet but profits are down last year from to 16 billion U$ from 27 in the year before.
Attentive bunnies may recall a few posts about the DOI, Charles Monnett and what turned out to be leaking of information to those opposing drilling in the Arctic, throwing sand in the gears.