Coal to Crude
Norman Roberts
February 27, 2010
A group of researchers from The University of Texas at
Arlington say they can refine low grade lignite coal into the equivalent of
crude oil for less than $30 per barrel. They also say the process is ready for
commercial use. If they are right this is the biggest economic news in decades.
It could spell a near immediate and permanent end to imported oil, lower fuel
prices dramatically, set the stage for an economic boom unlike anything seen
since WWII, and maybe even eliminate the US trade deficit, all at a
stroke.
The US has the worldīs largest reserves of recoverable coal, more than 275 billion tons of it according to the Energy Information Administration, probably several times that as discovery and extraction technologies improve. The UTA researchers think the same refining processes will work with oil shale. Weīre talking trillions of barrels of oil just in the US. Russia, China, India, and Australia all have sizeable coal reserves as well.
The implications are phenomenal. We are importing oil at a rate of over 330 million barrels per month. At $75 per barrel that represents an annual trade deficit of roughly $300 billion, and thatīs in a recession. Just think what it would do if suddenly we were spending that sum domestically, half on coal oil, the other half on other things. Then there are the savings in prices at the pump. The average American consumes about 465 gallons of gasoline per year. A $1 price drop would put more money in every pocket, and not just one time. Would that be a stimulus or what? With a little fiscal discipline we might even grow our way out of the unsustainable federal deficits now being projected. Federal taxpayers forked over $1.95 per gallon in ethanol subsidies in 2008, a total of $4 billion for all biofuels. Itīs hard to see how the farm lobby could justify continuing that.
Then there are the international politics. With oil revenues half what they are now OPEC would seem to be no longer a force. Without oil as a weapon Russia would likely behave as a more responsible citizen in Europe. Hugo Chavez would have fewer resources to support his mischief. Iranīs regime might well fall under its own weight. It wouldnīt necessarily be good news for all our friends though. Canada is far and away our largest supplier with most of that oil produced from hard to process oil sands. It might mean the near total loss of the revenue, a painful prospect. Mexico is dependent on state owned Pemex, already in long term decline. We could see renewed immigration pressure on our southern border. Iran might not be the only Middle East regime to topple. We could see another round of chaos in a part of the world that is already scary. It would be great news for China and India. Those countries desperately need reliable, inexpensive oil supplies to fuel their emergence into the first world and they would have them.
The only domestic opposition I can see would come from the "no such thing as clean coal" groups. But those folks are already reeling from the climate scandals. Itīs hard to see how they prevail in the face of such obvious and dramatic benefits. Coal based gasoline wouldnīt generate any more carbon dioxide than weīre already getting and a dollar or so per ton of coal devoted to landscape restoration should more than offset any conceivable damage. We have the highest unemployment levels of my lifetime. They are projected to last far into the future and this could be a solution. The stock market might even recover and with it a lot of retirement portfolios. If these researchers are right we may be looking at a way out of economic stagnation many observers think may otherwise be lasting, an answer to problems long thought intractable. Look for politicians to jump on board. I expect to see a lot on this. Iīm surprised we havenīt seen more already.
The US has the worldīs largest reserves of recoverable coal, more than 275 billion tons of it according to the Energy Information Administration, probably several times that as discovery and extraction technologies improve. The UTA researchers think the same refining processes will work with oil shale. Weīre talking trillions of barrels of oil just in the US. Russia, China, India, and Australia all have sizeable coal reserves as well.
The implications are phenomenal. We are importing oil at a rate of over 330 million barrels per month. At $75 per barrel that represents an annual trade deficit of roughly $300 billion, and thatīs in a recession. Just think what it would do if suddenly we were spending that sum domestically, half on coal oil, the other half on other things. Then there are the savings in prices at the pump. The average American consumes about 465 gallons of gasoline per year. A $1 price drop would put more money in every pocket, and not just one time. Would that be a stimulus or what? With a little fiscal discipline we might even grow our way out of the unsustainable federal deficits now being projected. Federal taxpayers forked over $1.95 per gallon in ethanol subsidies in 2008, a total of $4 billion for all biofuels. Itīs hard to see how the farm lobby could justify continuing that.
Then there are the international politics. With oil revenues half what they are now OPEC would seem to be no longer a force. Without oil as a weapon Russia would likely behave as a more responsible citizen in Europe. Hugo Chavez would have fewer resources to support his mischief. Iranīs regime might well fall under its own weight. It wouldnīt necessarily be good news for all our friends though. Canada is far and away our largest supplier with most of that oil produced from hard to process oil sands. It might mean the near total loss of the revenue, a painful prospect. Mexico is dependent on state owned Pemex, already in long term decline. We could see renewed immigration pressure on our southern border. Iran might not be the only Middle East regime to topple. We could see another round of chaos in a part of the world that is already scary. It would be great news for China and India. Those countries desperately need reliable, inexpensive oil supplies to fuel their emergence into the first world and they would have them.
The only domestic opposition I can see would come from the "no such thing as clean coal" groups. But those folks are already reeling from the climate scandals. Itīs hard to see how they prevail in the face of such obvious and dramatic benefits. Coal based gasoline wouldnīt generate any more carbon dioxide than weīre already getting and a dollar or so per ton of coal devoted to landscape restoration should more than offset any conceivable damage. We have the highest unemployment levels of my lifetime. They are projected to last far into the future and this could be a solution. The stock market might even recover and with it a lot of retirement portfolios. If these researchers are right we may be looking at a way out of economic stagnation many observers think may otherwise be lasting, an answer to problems long thought intractable. Look for politicians to jump on board. I expect to see a lot on this. Iīm surprised we havenīt seen more already.
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