You won't think much of Rio Blanco County if you ever drive through it. In fact, unless you take a right turn off
Interstate-70 West at Rifle, head north on Railroad Avenue and then west on Government road to Colorado state highway number thirteen, odds are you'll never even step foot in Rio Blanco County.

But even if you keep heading west toward Grand Junction, through the town of Parachute and the shuttered oil shale
refineries from the 1970s, you'll see the Book Cliffs geologic formation on your right. For miles and miles. It's
a bleak landscape. Almost lunar. At first glance, it's the kind of land you'd never want to explore, much less settle
down in.

Oil Shale Reserves: America's Strategic Future

In the small world of geologists, though, the region is well-known. In fact, you might even say it's the single
most important patch of undeveloped, unloved, and desolate looking land in America. But you'd never guess this
particular corner of the Great American Desert may play an integral role in America's strategic future just by looking
at it. You'd never guess that the whole stretch of brown, red, and orange land contains enough recoverable oil and
gas to make you forget about the Middle East for the rest of time.

The first seeping pools of oil were discovered in Western Colorado as far back as 1876, the year the state entered the Union. But exploration didn't get serious until drillers settled in the town of Rangely in Rio Blanco County.

By 1903, thirteen different drillers had come and gone in Rangely. According to the local museum, the only six wells that actually struck oil were producing just two to ten barrels of oil a day. Hardly a Spindeltop, the gusher that launched the Texas oil-boom on January 10th, 1901, and immediately began producing 100,000 barrels per day.

The energy reserves of the Piceance Basin, upon which Rio Blanco County sits, contain massive petroleum reserves of a very unusual nature: Oil shale.

Oil Shale Reserves: A Congressional Legacy

Most of the nation's oil shale reserves rest under the control of the U.S. government - a legacy of a 95-year old
Congressional Act. In 1910, Congress passed the Pickett Act, which authorized President Taft to set aside oil-
bearing land in California and Wyoming as potential sources of fuel for the U.S. Navy. Taft did so right away. The Navy
was in the process of switching from coal burning ships to oil burning ships. And the U.S. military, conscious of the
expanding role of America in the world, needed a dependable supply of fuel in case of a national emergency.

From 1910 to 1925 the Navy developed the Naval Petroleum and Oil Shale Reserves Program. The program became official in 1927 and President Roosevelt even expanded the scope of the program in 1942 as the U.S. geared up for war with Japan and Germany.

Several of the oil fields set aside for the nation's first strategic reserve, particularly Elk Hills in California,
would go on to produce oil for the U.S. government. Elk Hills was eventually sold off to Occidental Petroleum for
$3.65 billion in 1998 in the largest privatization in U.S. history. The shale reserves, however, still remain, locked
1,000 feet underground in the Colorado desert.

Unlocking The Future

The destruction of Hurricane Katrina shows the importance of a strategic petroleum reserve, or, more accurately, a
strategic energy reserve. But the SPR in Louisiana only holds about 800 million barrels of emergency, enough to get
the country through about 90 days of regular oil usage. That's barely a band-aid for a country that faces a potential
energy heart attack.

In other words, the future of oil shale may have finally arrived. Extracting oil from shale is no simple task, which
is why the reserves remain almost completely undeveloped. But an emerging new technology promises to unlock the
awesome potential of the oil shale.

"The technical groundwork may be in place for a fundamental shift in oil shale economics," the Rand Corporation
recently declared. "Advances in thermally conductive in-situ conversion may enable shale-derived oil to be
competitive with crude oil at prices below $40 per barrel. If this becomes the case, oil shale development may soon
occupy a very prominent position in the national energy agenda."

Estimated U.S. oil shale reserves total an astonishing 1.5 trillion barrels of oil - or more than five times the
stated reserves of Saudi Arabia. This energy bounty is simply too large to ignore any longer, assuming that the
reserves are economically viable. And yet, oil shale lies far from the radar screen of most investors.

But we here at The Daily Reckoning are on the case. Just yesterday, I caught a first-hand glimpse of a cutting-edge
oil shale project spearheaded by Shell. I trekked out to a barren moonscape in Colorado to tour the facility with
Shell geologists. To summarize my findings, oil shale holds tremendous promise, but the technologies that promise to
unlock this promise remain somewhat experimental. But sooner or later, the oil trapped in the shale of Colorado
will flow to the surface. And when it does, it will enrich investors who arrive early to the scene.

Can Oil Shale Change The World?

America's oil shale reserves are enormous, totaling at least 1.5 trillion barrels of oil. That's five times the
reserves of Saudi Arabia! And yet, no one is producing commercial quantities of oil from these vast deposits. All
that oil is still sitting right where God left it, buried under the vast landscapes of Colorado and Wyoming.

Obviously, there are some very real obstacles to oil production from shale. After all, if it was such a good
thing, we'd be doing it already, right? "Oil shale is the fuel of the future, and always will be," goes a popular
saying in Western Colorado.

But what if we could safely and economically get our hands on all that oil? Imagine how the world might change. The
U.S. would instantly have the world's largest oil reserves. Imagine…having so much oil we'd never have to worry about
Saudi Arabia again, or Hugo Chavez, or the mullahs in Tehran. And instead of ships lined up in L.A.'s port to
unload cheap Chinese goods, we might see oil tankers lined up waiting to export America's tremendous oil bounty to the
rest of the world. The entire geopolitical and economic map of the world would change…and the companies in the
vanguard of oil shale development might make hundreds of billions of dollars as they convert America's untapped
shale reserves into a brand new energy revolution.

Presidents Gerald Ford and Jimmy Carter may have been entertaining similar ambitions in the late 1970s when they
encouraged and funded the development of the West's shale deposits. A shale-boom ensued, although not much oil
flowed. The government spent billions and so did Exxon Mobil. New boomtowns sprung up in Rifle, Parachute,
Rangely, and Meeker here in Colorado.

And then came Black Monday. May 2, 1982. The day Exxon shut down its $5 billion Colony Oil Shale project. The
refineries closed. The jobs left (the American oil industry has lost nearly as many jobs in the last ten years as the
automobile and steel industries.) And the energy locked in Colorado's vast shale deposits sat untouched and unrefined.
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