American boffins say they have developed a viable process for making oxygen out of moon dirt, which could allow humans to live for long periods in lunar bases. The new tech has been tried out under the equivalent of the moon's one-sixth-G gravity aboard NASA's famous "vomit comet" low-gee simulator plane.
A long-term moonbase, which is still officially part of NASA's plans for the coming decades - though the whole US manned space programme is seriously imperilled by lack of funds - would surely require a means of producing oxygen locally. Astronauts need the precious gas to breathe, of course, but the need to refuel rockets on the Moon is perhaps even more critical. If all the fuel to be used on the Moon-to-Earth return trips must first be hauled up from Earth to Moon - requiring the burning of huge amounts more rocket juice to do so - the vast majority of the programme's budget and activity will be eaten up simply moving propellants through space.
More: http://www.theregister.co.uk/2009/09/25/lunar_oxygen_refinery_tech_vomcom_trial/