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The problem is, burning those fossil fuels takes oxygen. Oxygen on the moon would probably be too precious to use that way.

Pretty sure they're talking about paleontology, not fuel.

Not entirely true. Burning things requires an oxidizer, not necessarily oxygen. Other oxidizers include chlorine, fluorine, nitric oxide, nitrogen dioxide.

Oxygen is pretty abundant in lunar regolith. I'm not sure about how much energy it will take to extract it.

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