Synthetic Fuels

Synthetic: “A substance or material produced by chemical processes rather than occurring naturally.” © Microsoft Encarta

A large percent of what you pay for gasoline and diesel goes to foreign governments that want you to believe the price of oil is based on fair market value. The price of oil is not “fair” because the global petroleum industry is neither a fair nor a free market — it is a monopoly controlled by foreign nationalism — over 80% of global oil production is under the control of foreign governments.

The USA possesses the world’s largest reserves of “unconventional” oil — coal and oil shale — estimated to be the equivalent of 1 trillion barrels of oil or more. Why, then, is the USA exporting its wealth to foreign countries instead of using the money to develop synthetic fuels from American coal and shale? Why are U.S. citizens allowing it?

Synthetic fuels would be produced in America today if the U.S. synthetic fuels industry had been supported and developed back in the 1980's. Why was that effort discontinued?

In 1984 President Ronald Reagan cut-off government funding for the new U.S. synthetic fuels industry because he believed U.S. synthetic fuels would be too expensive.

This policy worked, oil prices remained low for many years (primarily because the Reagan Administration allowed U.S. oil companies to continue importing foreign oil into the U.S. without limits or restraint, increasing U.S. oil dependence from 18% in 1980 to over 60% today) but now the inevitable has happened. The USA is caught once again, unprepared to fuel its own economy. Ronald Reagan’s short-sighted cost-cutting decision did increase short-term profits, for a while. But clearly, his policy lacked long-term pragmatic vision—his actions ended all hope for a viable U.S. synthetic fuels industry, and eliminated U.S. competition to Middle-East oil.

Two years later, in 1986, President Reagan signed into law the Consolidated Omnibus Budget Reconciliation Act of 1985 which abolished the Synthetic Liquid Fuels Program. It was estimated that less than $8 billion was actually spent on the program. Today, the U.S. is spending more than $8 billion every month in Iraq. [The nonpartisan Congressional Budget Office (CBO) has estimated the cost of the Iraq war is about $9 billion per month.]

Ronald Reagan left office in 1989, why should he get all the blame? What about George H. W. Bush and William Jefferson Clinton? They held office after Reagan, so they could have reversed his policy; why didn't they?

President George W. Bush did attempt to reverse Reagan's policy. In 2005 Bush asked Congress to fund a synthetic fuels plant for the U.S. Air Force that would have insured a secure domestic supply of jet fuel for military aircraft—why did Congress fail to support the president's request?

Today, the U.S. Air Force is making every effort to develop synthetic fuels, but the efforts have been blocked by the U.S. Congress because of environmental concerns.

“We don't want new sources of energy that are going to make the greenhouse gas problem even worse,” said House Oversight Committee Chairman Henry Waxman, D-Calif. In a letter to Defense Secretary Robert Gates, Waxman wrote that a promise to control greenhouse gas emissions from synthetic fuels was not enough. Waxman cited Section 526 of the 2007 energy bill that prohibits federal agencies, including the U.S. Military, from purchasing synthetic fuels unless the fuels emit the same or fewer greenhouse gases as petroleum.

Section 526 of the Energy Independence and Security Act of 2007, signed into law by President Bush on December 19, 2007

“Prohibits a federal agency from entering into a contract for procurement of an alternative or synthetic fuel, including a fuel produced from nonconventional petroleum sources, for any mobility-related use (other than for research or testing), unless the contract specifies that the lifecycle greenhouse gas emissions associated with the production and combustion of the fuel supplied under the contract must, on an ongoing basis, be less than or equal to such emissions from the equivalent conventional fuel produced from conventional petroleum sources.”

Section 526 was inserted into the 2007 energy bill by U.S. Congressman Henry Waxman (D-CA), chairman of the House Committee on Oversight and Government Reform, specifically to block military sponsorship of synthetic fuels made from USA coal, “including a fuel produced from nonconventional petroleum sources,” which refers to oil shale, tar sands and heavy crude. (Nonconventional hydrocarbon resources in the USA hold more than one trillion barrels of oil equivalent.)

Henry Waxman's actions are similar to what Ronald Reagan did. Waxman's purpose may be different than Reagan's but his actions are also short-sighted.

"It is a basic lesson of chemistry that the energy needs we meet today with petroleum can be met by other hydrocarbons, including coal, tar sands and oil shale, for which there are centuries' worth of supplies, and environmentally sound methods of production available today or within economic reach. Natural petroleum has a cost advantage as a liquid fuel but the cost of making synthetic [fuels] petroleum from coal or tar sands is modest and likely to fall substantially if carried out on a large scale and with appropriate research and development.

"The alleged cost advantages of natural petroleum over synthetic [fuels] petroleum have probably already disappeared when we recognize the U.S. is paying a fortune in finances and blood for Middle East oil that is not counted in the price at the pump. The dollar costs of U.S. military operations in the Middle East attributable to policing the energy flows are tens of billions a year, if not $100 billion (£ 57 billion) or more. This amounts to a hidden subsidy to oil use of ten dollars or more per barrel exported from the region." — America's disastrous energy plan By Jeffrey Sachs, director of the Earth Institute, Columbia University. Published in Financial Times, December 23, 2003
*In 2003 the global price of oil was less than $40 per barrel.

Recommended reading:
Frequently asked questions about synthetic fuel
The barriers to developing a synthetic fuels industry are not technical, but social
—By Galen J. Suppes, Ph.D. and Truman S. Storvick, Ph.D.
Galen J. Suppes is associate professor and Truman S. Storvick emeritus professor of the department of chemical engineering at the University of Missouri in Columbia.

Recommeded YouTube videos:
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President Gerald Ford - 1975 Address on Energy Policy
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