Stan Geiger

What About Coal?

OPEC, in an expected move in some circles and an unexpected move in others, announced it will cut daily oil production in an effort to stop what has been an ongoing decline in prices. While OPEC’s importance to U.S. supplies is vastly overstated, this move serves to remind us of the fact that OPEC does have enough power to influence world oil prices. All other considerations aside, our reliance on oil needs to be curtailed. Cheap and available energy is central to our ability to maintain economic strength.

There is a public discourse underway, focused mainly on the generation of electricity. Windmills, nuclear and solar are all options on the table. But the fact of the matter is, most of our oil consumption goes to transportation. We burn oil fueling planes, trains and automobiles. If we are to shed our dependence on imported oil, we must come up with a new transportation fuel. Ethanol from corn isn’t the answer. There is an answer, however, lying right under our feet. It would be good if someone started paying attention to it.

It is understandable that people shy away from coal as the fuel to power electricity plants or heat homes and businesses. I mean nobody wants to live in a city where the sun never shines. But coal has abilities beyond its traditional use. It can be turned into liquid diesel.

The technology to turn coal into liquid diesel has existed for decades. The Nazis used it to fuel their warplanes during WWII. One assumes the reason diesel-from-coal has never caught on as a transportation fuel in America has to do with simple economics. Oil has always been plentiful and relatively cheap. But the world is changing. OPEC nations currently see an oil glut developing. Daily consumption is falling short of daily production, in other words. That will not last. The world is on a collision course with a time when worldwide oil production will not be able to keep up with worldwide oil demand. That circumstance will, of course, lead to much higher prices---permanently. But it will also set the stage for a war that will make WWII look like a day at the beach.

It is said the U.S. consumes 25 percent of the world’s oil. U.S. oil production, meanwhile, has been in decline for nearly 40 years. Our daily production is now half what it was at the peak. We are importing nearly three times the amount of oil we produce. Boone Pickens is right about one thing: we can’t drill our way out of this problem. At the same time, he’s wrong about nat gas being the solution.

Currently, domestic nat gas production barely keeps up with demand. If we start fueling rolling stock with the stuff, it won’t be long before we find ourselves in the same position with nat gas that we are currently in with oil: we will be dependent on foreign sources. Tulsa’s own super billionaire, George Kaiser, has reportedly made heavy investments in the liquid natural gas biz of late, if that tells you anything.

While the U.S. can’t become energy independent relative to oil and natural gas, it can become energy independent through the use of coal. The U.S. is the undisputed king of coal. We have, far and away, more coal reserves than any nation on the planet. China is a distant second.

The resource is plentiful. The technology is here now. Bonus money: They say diesel made from coal burns cleaner than diesel made from oil. Coal paves the road to America’s energy independence. I see no reason to continue to ignore that fact.

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