America's Energy Solution Is Right Under Us...Literally

Whenever there is an energy crisis and high gas prices, we get the same tired old prescriptions that haven't done anything to address the problem. We get calls to suspend gas taxes - with no explanation of how we're supposed to maintain roads without gas tax revenue. We get calls for more tax breaks to the oil/gas profiteers who are making record profits. We get demands to loosen environmental restrictions on drilling, as if there is simply an infinte supply of drillable domestic petroleum (there isn't). What we never get, however, is serious investment in new, well-known technologies that could start weaning America off foreign oil.

Case in point is the Bush administration's unwillingness to show some leadership on coal-to-oil technology. Right now, America has billions of tons of coal that could be quickly and cleanly converted into fuel - fuel that burns far more cleanly than any used today. The process used to convert the coal, called Fischer-Tropsch, has been around since the 1920s, and has been used by countries who (for various political/economic reasons) can't import oil.

The reason why Fischer-Tropsch hasn't been used more widely over the years is because it is only profitable when crude oil prices go above about $35 a barrel. But now, with oil above $60, few think it will ever go back down below the Fischer-Tropsch profit point. That means America has a golden (but as-yet-untapped) opportunity to use its own resources to both improve the environment with a cleaner fuel, and get us off foreign oil. Additionally, the process produces hydrogen that can be stored as fuel for a future hydrogen economy when that technology develops, and it creates electricity as a byproduct.

This is no pie-in-the-sky idea. As the Financial Times reports, America's biggest economic competitor, China, is poised to begin massive investments in this coal-to-oil technology, ultimately giving it a leg up on America if we don't act.

To be sure, coal-to-oil isn't perfect in that it ultimately creates a combustible fuel. Again, however, it is far better than what we have today because it produces a cleaner-burning fuel than any used today.

It is also true that coal-to-oil would require a significant investment of resources. But those resources would be well spent because there's a lot in it for Americans beyond just bringing down energy prices, getting America off foreign oil, creating a cleaner burning fuel, and creating thousands of jobs here at home (as if those wasn't enough). Taxpayers actually own much of the coal that can be used for this process. With political leaders dedicated to protecting taxpayers interests (as opposed to only the oil industry's interests), taxpayers could be cut into the massive profits that a coal-to-oil system would create. In Montana alone, the state and federal government own 115 billion tons of recoverable coal. That amount of coal could produce almost 200 billion barrels of fuel, and a big chunk of the revenues from that fuel would be the taxpayers' - money that could address America's pressing health care, education and homeland security challenges.

With no leadership from the White House on energy, and with both parties joining hands to pass the unproductive energy bill, it is going to be up to the states to pioneer new energy investments in not only coal-to-oil technology, but ethanol, wind power, wave power, and other alternative energies. But the bottom line is clear - unless political leaders stop proposing the same policies that got us to this energy crisis and start boldly pressing forward in new directions, America will be at a serious economic disadvantage in the years to come.