Art Berman has a post at Forbes looking rather skeptically at breathless reports about a "massive oil find" in the Permian basin in Texas (like this one - A $900 Billion Oil Treasure Lies Beneath West Texas Desert) - Permian Giant Oil Field Would Lose $500 Billion At Today's Prices. Tim Worstall isn't very impressed either - The Midland Basin Wolfcamp Shale Is Not Worth $900 Billion - That's Not How Resource Economics Works.
Read the source–the U.S. Geological Survey. The USGS did an assessment of the undiscovered, technically recoverable resources of the Wolfcamp shale in the Permian basin. “Undiscovered” means what it says–it has not been discovered. It’s an estimate, an educated guess. ”Technically recoverable resources” means the oil that could be produced if cost didn’t matter.
Where Did $900 Billion Come From?
Where did the $900 billion value come from? Multiply 20 billion barrels times $45 per barrel and you get $900 billion. In other words, if the oil magically leaped out of the ground without the cost of drilling and completing wells; if there were no operating costs to produce it; if there were no taxes and no royalties.