NCPA - National Center for Policy Analysis


September 7, 2007

High gasoline prices and concern about energy security are driving entrepreneurs to explore various ways to produce transportation fuels, says H. Sterling Burnett, senior fellow at the National Center for Policy Analysis.

For example, though rarely discussed, there is a well-developed process to turn coal into oil:

  • China is already bringing coal-to-oil plants online, with plans to produce as much as a million barrels of oil a day from coal by 2020.
  • Commercial coal-to-oil plants have not been built in the United States because they require more long-term capital investment than conventional oil.
  • But the Energy Department has estimated that coal-to-liquids can compete if the price of conventional oil is above $30 per barrel.
  • Based on predictions that the era of cheap oil is over, a consortium of companies have begun planning to produce oil from coal.

In addition, the process produces natural gas that can be used for heating or electric power generation and it removes more than 30 percent of the pollutants released when coal is burned to produce electricity.

There are other possibilities as well:

  • Extracting oil from shale can be profitable as long as the price of conventional oil is above $30 per barrel.
  • There are vast untapped conventional oil reserves under the crust of the Outer Continental Shelf (OCS) and the coastal plain of the Arctic National Wildlife Refuge (ANWR).
  • There is four times as much oil under the OCS as all other current U.S. oil reserves.
  • And the ANWR coast contains 6 billion to 16 billion barrels of economically recoverable oil at $20 a barrel -- up to double that at $40 a barrel.

Source: H. Sterling Burnett, "Fueling our future," Washington Times, September 7, 2007.


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