Gasoline from Coal?

Over the past few months, the Projo has been running an interesting series of energy-policy editorials. Today's editorial contained a reference to a possible new way to produce gasoline that I had never heard of before...

The coal in Illinois alone could make more energy than all the oil in Saudi Arabia. And the technology to turn coal into gasoline is well tested. The Germans used it extensively during World War II. And the technology to control emissions of the traditional pollutants from coal-burning electricity plants -- such as nitrogen oxides and sulfur dioxide, which cause acid rain -- is readily available.

What is still needed is a way to remove carbon dioxide, the greenhouse gas, in large quantities.

Wallace Broecker, a climatologist at Columbia University's Lamont-Doherty Earth Observatory, says that pulling out the carbon dioxide is not difficult. It's already done in submarines and space shuttles. The tough part is doing it on a gigantic scale, which would be necessary if coal were to be turned into motor fuel in large quantities.

Mr. Broecker asserts that doing this would come at a cost, but a manageable one. He says that gasoline can now be produced from coal for from $40 to $45 a barrel. The cost of capturing and storing the carbon dioxide would raise its price by 20 to 30 percent. But with oil recently at over $75 a barrel, the gasoline produced from coal could be economically competitive.

The editorial calls to mind this famous (at least amongst energy-wonks) quote...

The Stone Age did not end for lack of stone, and the Oil Age will end long before the world runs out of oil.

If you think the above quote came from someone like a venture capitalist trying to drum up investement for an alternative energy start-up, you'd be wrong! The quote is actually from Sheikh Zaki Yamani, a former Saudi Arabian oil minister, expressing concern that continually high oil prices would accelerate the process of alternative energy development and reduce the demand for (and therefore the price of) his country's oil.

This kind of concern among oil-suppliers, intensified when they start hearing people talking about making gasoline from coal, is almost certainly a large part of the reason we've seen a sharp and sudden decline in oil and gas prices over the last couple of months.