Gov. Parnel has been pushing for tax breaks for oil companies to encourage more exploration in Alaska due to the shale oil boom in the lower 48, but is this boom already a bust? Currently it cost $80 to $90 a barrel to extract shale oil from the ground, as demand falls due to declining economic activity the price of oil falls below the level that makes it worthwhile to extract it from expensive shale oil drilling and fracking. Shale oil and shale gas share some problematic properties. The cost of drilling each well is a big number, 6 to 8 million. The wells deplete very rapidly, over 40% after one year in the bakken formation of North Dakota. The oil is not distributed equally over the whole play but exists in " sweet spots ". The sweetest sweet spots were drilled the earliest and the quality of the remaining potential drill sites is already in decline. The current trend shows declining first-year productivity in new wells drilled since 2010 running at 25%. There are over 4300 shale oil wells in the bakken formation of North Dakota producing 610,000 barrels a day. In order to keep production up, the number of wells will have to continue increasing at a faster rate than previously. This is referred to as " The red queen syndrome " which alludes to the character in " Alice in wonderland " who famously declared that she had to run faster and faster just to stay where she is. The catch to all this is that the impairments of capital formation are working insidiously in the background to guarantee that the money will not be there to set up the necassary wells to keep production at current levels. In other words shale oil and shale gas are ponzi schemes. The story in Eagle Ford play in Texas is very similar. So in short do we go with Gov. Parnell's idea in lowering taxes for his oil buddies so they can put more money in their pocket which in turn encourages them to drill in alaska, but at the same time Alaskan's lose more revenue due to the tax breaks. Or do we hold out and wait for the shale oil bust causing the oil companies to once again look to alaska for oil bringing more revenue to benefit alaskan's than what we would get from a tax break for oil companies?