Replacement Costs of Domestic Crude Oil

Abstract

In the long run, selling prices will equate with replacement costs if companies are to remain in the business. Thus, the study of replacement costs provides a powerful analytic tool for further understanding of the uncertainties in future oil prices and domestic crude oil productive capability. The analysis provides insights about the time at which supplemental sources of fuel from synthetic or alternative sources may become economic, and provides one means for quantifying the costs and benefits of these alternative decisions.