A sedimentary rock, coal is primarily made up of carbon. Carbon most commonly occurs in stable compounds but when combined with hydrogen it forms volatile substances known as hydrocarbons. Of those, crude oil is the most useful, because when refined it yields flammable fluids such as diesel and gasoline which are used in combustion engines.

As demand for oil began to rise early in the 20^th century, scientists became intrigued with the possibility of converting carbon-rich coal into hydrocarbon liquids as a potential replacement for petroleum-derived fuels. Franz Fischer and Hans Tropsch, two German scientists, accomplished the feat in the 1920s. Named after its inventors, the Fischer-Tropsch method is a multistage process during which coal is transformed – through gasification and liquefaction – into synthetic diesel and jet grade kerosene.

The method’s practical viability was first seriously tested in the 1940s. Lacking adequate access to oilfields during World War II, Germany built twenty-five coal-to-liquid plants to boost its fuel supplies. The enterprise proved a success and by 1944 the plants were discharging 144,000 barrels of synthetic fuels a day, enough to cover half of the country’s wartime needs.

Some two decades later, South Africa began using the same technology to soften the hardships of its Apartheid isolation. It proved so successful that the program was continued even after the embargo was no longer an issue. Today almost all diesel engines on South Africa’s roads are powered by synthetic coal fuel.

But even after Germany and South Africa demonstrated its efficiency and reliability, the coal-to-fuel technology failed to find wider use. The reason was cost.

Historically the cost of producing a gallon of synthetic fuel has been higher than what it could fetch on the market. Conversion only becomes profitable when crude passes $55 a barrel, because at that price diesel and kerosene begin to sell for more than what it costs to obtain them from coal.

Since until quite recently the price of oil was below that mark, coal-to-fuel conversion was not commercially viable. This is the reason why it was only done in countries that – for one reason or another – lacked adequate access to petroleum-based products.

The roof-shattering march of crude, however, has changed this situation. At today’s prices, conversion would be not only economically practical, but also decidedly profitable. The combination of current market conditions and long-term outlook thus creates a powerful incentive for the private sector to channel money, capital and entrepreneurial energy into the coal liquefaction enterprise.

This should be great news for the United States which with nearly 270 billion tons of recoverable coal leads the world in reserves. To put it in perspective, U.S. coal deposits contain more energy than that of all the planet’s oil reserves put together. So vast is their potential that at a standard conversion rate of two barrels of liquids per one metric ton of coal, America’s fuel needs would be taken care of for well over a century.

This in effect means that as long as the price of crude oil remains above $55 a barrel – and there is every reason to believe it will – America can enjoy fuel self-sufficiency for as long as the eye can see.

It is important to grasp the full import of this: Unlike all the other ideas and proposals for achieving oil independence, coal conversion represents no false hope or wishful thinking but an eminently feasible and realistic possibility.

No new inventions, no technological breakthroughs, no extensive infrastructure modifications, no lengthy testing, no public investment or government incentives are required to make it happen. Everything is already in place to bring it about:

1. America possesses abundant supplies of coal
2. Proven technology exists to convert coal into fuel
3. Market conditions make conversion commercially practical

While the first two conditions have been true for a long time, the third did not come into play until last year. With the rise in price, however, all the necessary prerequisites for America’s fuel self-sufficiency have been met. All that needs to be done is to remove any artificially imposed impediments that may stand in the way. Most of them are in the form of environmental rules and regulations which make energy production such a difficult and problematic enterprise in this country.

As far as the environment is concerned, coal conversion and its derivatives are cleaner than their crude oil counterparts. There is technology to capture the CO2 released during the liquefaction process and the resulting diesel and kerosene have lower sulfur content than those refined in the conventional way. As a result, during the combustion process they release fewer particulates and less nitrogen oxide then their petroleum cousins. Such, in fact, is their purity that they are often referred to as ultra-clean fuels. This should go a long way toward assuaging environmental concerns.

The rising energy prices have made it possible for America to commercially utilize its enormous coal reserves and to become fuel independent in the process. The only thing required at this point is for government not to interfere with market forces which inexorably incline toward this outcome.