How to Keep It Going:Synfuels
Bethell, Thomas N.
How to Keep It Going: Synfuels by Thomas N. Bethell I want energy. You want energy. We all want energy. Even Congress wants energy. Congress, at last, says it's done something about energy....
...More energy consumed, of course...
...It commits a spattering of those billions to any idea that's gotten good press, from biomass to gasohol to home weatherizing...
...Since the synfuels projects are guaranteed their market, taxpayers pay price-support subsidies...
...Johnston made the case that energy independence and loan guarantees were vitally linked...
...The Great Plains consortium suddenly found itself face-to-face with the prospect that construction—now pegged at $1.5 billion and climbing by the minute—could be delayed another year or more, while chorus lines of lawyers entertained the courts...
...This makes the yardstick meaningless...
...And building a full-scale production facility like Great Plains makes about as much sense as doing a high-dive into a pool of dehydrated water...
...That seems simple enough...
...Retorting consumes so much energy, the synthetic oil is always far more costly than regular oil...
...The "energy crisis," much to everyone's disappointment, turned out to be not such a crisis at all...
...There may be more kerogen in the country's oil-shale than there is crude in Saudi Arabia...
...By entrusting synfuels handouts to oil companies, Congress has insured that producers will have about as much interest in finding a cheap process as surgeons have in healing with a herbal compress...
...All these devices consume vast amounts of power in the process of beating one fuel source into submission and then making another fuel source out of what remains...
...Murphy's Law We can pick up his trail where it's still fresh—in the innocuous Title I, Section 127, paragraph (e) of the new law...
...For the equivalent of $88 billion...
...And the people are getting their wish...
...Coal becomes a "synfuel" when you convert it to a liquid or a gas through processing...
...This was Murphy and some oil-company friends...
...Garvin is right as far as the engineering goes—a huge oil-shale industry could be built...
...So the success of the Beulah project hinged on the success of the crisis...
...Then President Nixon launched his "Project Independence," which seemed right up ANR's alley...
...Because the Senate bill was more complicated than its counterpart from the House, critical maneuvering took place in conference committee...
...Synthetic oil could be looked on (as the South Africans look on it) as a very expensive but necessary way to keep an economy running...
...For logistical support, the senators had on hand something called the Ad Hoc Committee on Synthetic Fuel...
...Namely—that it won't make much gasoline, and we don't need it...
...They form a powerful constituency lobbying in favor of anything that preserves the nature and magnitude of the existing supply system, like synfuels...
...It sounds like a lot...
...Once the incredible price of synfuels is officially sanctioned, it becomes much easier to impose higher prices on everything else, since even high prices look good compared to incredible prices...
...The most ingenious ideas will be rewarded with federal funds...
...When separated from the rock, it burns...
...Synfuels projects historically have demonstrated a distressing tendency to consume as many BTUs as they produce...
...Synfuels production is the perfect medium for that...
...It's important to understand that the synfuels program is more than just another legislative Christmas Tree for special interests, although the boughs do hang heavy with gaudy ornaments...
...The situation left a lot of marketing types gibbering at their wall charts, and executives staring blankly into their cognacs...
...Detroit couldn't care less if auto efficiency hurts Texaco's business...
...Prevailing wisdom said that we were running out of oil and gas both...
...Only a fool, or the government...
...But not much...
...Let's call him Bill Murphy, since that's his name...
...It seemed like a good idea at the time...
...Because industry's favorite idea for syn-oil production will create environmental havoc on a scale far outweighing any possible benefits...
...The other thing the yardstick plant was supposed to do was try to lick the Net Energy Principle...
...With energy prices soaring, they were blandly optimistic that the Great Plains syngas plant would make them more money...
...Maybe nobody would notice...
...If you have to put in more energy than you take out, how could it be otherwise...
...Congress has passed the Energy Security Act of 1980, better known as the synfuels bill...
...Besides, if you saturate marlstone with water so something might grow, you also wash out the rock's lethal components, cadmium and arsenic...
...Recent memories of Three Mile Island loomed large—its operators were appearing before commissions and hearings everywhere, trying to pass the cost of the fiasco along to someone, anyone other than the stockholders...
...A randomly selected AP story on the Energy Security bill gushed that it "will launch a domestic synthetic fuels industry as an alternative to foreign oil...
...Five times the national debt...
...But when it came to cash, what he had in mind was support for research and small pilot plants...
...For industry, the program contains no stick of any length...
...A handful of congressmen fought to include a "yardstick" synfuels plant in the Energy Security Act...
...The Seven Sisters gladly gave themselves in marriage to OPEC because the cartel is the most powerful instrument of priceraising ever devised...
...If oil cost $1 million a barrel, synthetic oil would cost $1.5 million a barrel...
...Exxoneration You won't be surprised to learn that the White House does not view synfuels as the dehydrated water of energy...
...This project is only one of many, but it's a good example of how common sense can be stood on its head...
...That's staggering," notes Exxon chairman Clifton Garvin, "but it's within the capabilities of private enterprise...
...The handful of plants to make synthetic oil for gasoline may be useful projects...
...The panic mentality of OPEC price increases makes it possible to argue for even more expensive energy sources like synfuels, ideas which otherwise could never get a hearing...
...When the act was signed, the first loan—handed out by Carter himself in a public ceremony—was for (surprise...
...The law says government can build such plants— only after offering industry a full range of subsidies to build one on its own...
...But the buyer then needs less fuel...
...GM was not amused by the idea of a $10- million surcharge when reality caught up with ANR's plant...
...That could be tolerated if there were some relief for our predicament over OPEC oil...
...More than two dozen large synfuels projects have been in various planning stages for years, but until the Energy Security Act, every one was about to vanish because of this principle...
...The energy they require has to come from somewhere—from electricity and process steam derived from coal or gas, from internal-combustion engines that drive the mining gear by burning oil...
...They either had to get a loan guarantee and price supports from Washington, or pass the risk along to their customers...
...It might be reasonable to convert the ample coal and natural gas supplies into something that would run a car, even if you take a net loss in the bargain...
...This doesn't mean the idea of synfuels should be forgotten...
...If the pessimists were right and natural gas were disappearing, competition wouldn't matter...
...Since commercial-scale oil-shale projects would require digging earth at approximately the same volume and rate as the Panama Canal, all that popped rock could be a bother...
...But Exxon's stockholders need not worry about whether Garvin is a visionary, or has popped marlstone for brains...
...Suddenly, we're down to a six percent reduction in foreign oil...
...The Council's office is in a building with one of the highest square-foot charges in Washington...
...You might get half a million barrels by 1990, maybe" says J.R...
...Once the government offered to waive the Net Energy Principle by unlimited subsidies, Exxon stepped in and acquired Atlantic Richfield's interest in an oil-shale project that had been bogged down for 20 years...
...So the company is doing in its own propane-gas division...
...Conoco...
...Practically overnight, the mendicants turned themselves into saviors...
...Gulf bought Pittsburg & Midway Coal in 1963, just after it received a major synfuels research contract from the old Office of Coal Research...
...The oil companies control coal production, and determine how fast the reserves are brought to the surface...
...ANR leads a consortium of companies that have been trying to build the first "commercial scale, high-BTU coal-gas plant" in the U.S...
...At the end, you have more rock than when you started...
...The sponsors (ANR, People's Gas, Columbia Gas Systems, Tenneco, and Transcontinental Gas Pipeline calling themselves the Great Plains Gasification Association and christening the proposed plant Great Plains) seemed to be in an excellent position to float the project...
...The "Corporation," the Synthetic Fuels Corporation, will make solicitations—meaning S FC will invite entrepreneurs to bring their blueprints to Washington...
...Not only is there no need for synthetic natural gas, there's no need for synthetic oil either...
...Oil companies started buying coal companies in part to monopolize energy production...
...The Arab oil "embargo" had just stopped the U.S...
...Some might call them scenic, but there's no accounting for taste...
...Real natural gas is cheap and plentiful...
...Just because there's no way around the Net Energy Principle now doesn't mean one won't be invented...
...Big Coal Oil shale—and synfuels in general—are the moral equivalent of a scorched-earth strategy...
...There were two ways to do that...
...Too much risk," the bankers muttered...
...Murphy is the Washington lobbyist of a company called American Natural Resources...
...Thus synfuels become an "energy solution" in the same way that dehy-r drated water—just add water—is useful for a desert...
...How could things have gotten so screwed up...
...This was no nuisance suit, either...
...Another reason was (so far unfounded) fear of synfuels...
...For the synfuels lobby, this was all to the good...
...But it's more than just a neighborhood utility...
...Those that do might, if all goes well, produce 500,000 barrels of synthetic oil a day by 1992...
...Congress felt the same way: the bill passed the Senate 78 to 12, and cleared the House 317 to 93...
...It would require a network of surface mines, each about three miles long, a mile wide,and half a mile deep—larger than any existing mine today...
...was about to run out of oil, quick-thinking entrepreneurs began buying up oil-shale lands...
...That only pays for construction...
...In reality, Section 127 (e) is what one congressional aide glumly calls "the William T. Murphy, Jr., job protection clause...
...Great Plains...
...A recent two-year marlstone reclamation experiment in Colorado produced nothing but a few brave weeds...
...While Johnston fulminated about the Arabs and little seedlings, Murphy was always on hand, watching the fine print...
...Thomas N. Bethell is an edit or o/The Washington Monthly...
...It got final construction permits from the Federal Energy Regulatory Commission...
...People would pay any price to get syngas...
...As Carter shook hands with ANR chairman Arthur Seder, proclaiming it a "rare, historic moment," there was an almost audible sigh of relief from the consortium and its bankers...
...When the lemmings begin to move, the resourceful lobbyist knows which cliff to steer them over...
...Much ofthat water can't be recycled because it is broken down during the synthesis...
...The Senate's conference manager was Bennett Johnston of Louisiana, a skillful negotiator and a man sympathetic to companies with pipelines to the Gulf Coast...
...Simply put, it says that there's no point doing something if you have to put in more energy than you take out...
...Within days, the normally slumbrous DOE had announced a $250-million guarantee to back the initial phase of construction...
...Equally important, the Net Energy Principle indexes the cost of synfuels to the prevailing price of energy, and insures that synfuels will always be more expensive...
...ANR knew its syngas, barring some technical breakthrough, could never be costcompetitive with real natural gas...
...There was no reason to build the plant anymore...
...If the choice really boiled down to "Either destroy Colorado or destroy the country," obviously Colorado would have to go...
...This was to be a government-owned independent competitor whose mission would be to make the cheapest possible synfuels...
...Technically there is a yardstick provision in the law, but it is weaker than an anemic ballerina...
...But synfuels are the centerpiece...
...Its factories will be costly and will foul the land and air with all manner of new pollutants...
...Coal companies seldom try to cut prices to win oil customers over to coal...
...Oil companies worried that someday a technological breakthrough would negate the Net Ener-gy Principle, allowing coal companies to make liquid fuel and compete openly on the transportation market...
...Someday, they say, your Chrysler K-Car will be purring along on homegrown hydrocarbons...
...The yardstick plant was supposed to determine the actual cost of synfuels production, so that price subsidy levels for plants' products will be set honestly...
...Donald Carr, a chemist with long and unhappy experiences in marlstone, wrote in his 1976 book, Energy and the Earth Machine, "Such big corporations as Exxon, Texaco, and Mobil have managed to restrain their enthusiasm [for oil shale], since to my knowledge they have not spent a nickel to buy their way in...
...The three gas systems had customers scattered all across the country...
...The bill isn't confined to synfuels...
...Well, there are a lot of desolate canyons out West we might as well fill in...
...There is no known organized opposition as of press time...
...But for the moment building pilot plants makes little sense, since you know in advance they will all be prisoners of...
...They flow to the nearest watershed and into streams...
...It reads: "Thirty days after the enactment of this part, the Secretary of Energy, on behalf of the Corporation, and pursuant to authorities in this part, may make a solicitation for commercial-scale high-BTU coal-gas plants which shall be reviewed and acted upon by the Corporation pursuant to this part...
...Regular, cheap natural gas was headed for the market...
...Research aimed at finding a cheap, lowenergy synfuels process should continue, funded by the government if necessary...
...Add to this that synfuel production yields all manner of foul byproducts that, at best, require energy to treat and dispose of...
...ANR is a familiar name to people in places like Detroit and Grand Rapids, where the company sells natural gas...
...Rising energy costs hurt, not help, synfuel economics...
...So the total synfuel production of 2 million "equivalent" barrels is only five percent of our supply...
...This is the kind of grand can-do bravado oilmen love...
...What Johnston may have gotten in return, no one can say, although his future election campaigns are unlikely to collapse for lack of contributions...
...Another possibility is to compact it back down to size...
...The two great flaws of synfuels projects—they consume so much energy their products will always cost more than the prevailing price of energy, while nobody needs or wants synthetic natural gas anyway—were converted into boons...
...Thus, it's speculated that with the price of oil at $30 a barrel, synthetic oil will cost $45 a barrel...
...They could hardly abandon it without subjecting themselves to raised eyebrows, or worse...
...Oil, unlike the country's many secure energy, sources, is in danger of being cut off by hostile foreign powers...
...In the short term, he got Murphy by his side for more than seven months, from November 1979 to enactment of the bill on June 26, 1980...
...The last company in the world to want one would be an oil company, since this would drive down the price of synfuels and possibly even undercut the artificially high price of natural oil...
...In fact, syngas might cost as much as twice what the real thing cost...
...But that's all right...
...The federal loan guarantee, a sort of advance bail-out, seemed just beyond reach...
...Conoco bought Consolidation Coal in 1966, just after Consul's president issued an optimistic report on synfuels developments...
...As noted before, few synfuels plants will make anything that replaces oil...
...This is not because big business longs to rape the earth...
...But so many senators were anxious to prove Dale Bumpers right that 30 of them insisted on serving...
...Extra cushion in place, the Great Plains consortium settled down to actual work...
...But the synfuels program has a few drawbacks...
...The Energy Security Act was inching its way through conference...
...For the Great Plains plant, Johnston offered a special grade of fertilizer...
...But it didn't discourage Bill Murphy...
...Murphy provided the exact language his company wanted, language designed to make sure, beyond any doubt, that the new Synthetic Fuels Corporation would not only offer loan guarantees to all synfuels projects but specifically underwrite ANR's plant...
...in its tracks, giving us unaccustomed intimations of mortality...
...The American Petroleum Institute and the National Coal Association now sing in two-part harmony...
...ANR top executives were committed to the Beulah plant, however...
...There is no known opposition because no one is opposed to solving "the energy crisis," and everyone has been duped into thinking synfuels will accomplish this end...
...It deploys thousands of trucks and drilling rigs and all manner of paraphernalia related to making money, which it has been doing with gusto for some time...
...Anything appended by the word "energy" was getting funded...
...Estimates for construction had risen to $1.2 billion...
...They've always been wrong...
...Despite all the glowing statements about ending the oil crisis, more than two thirds of the synfuels plants won't produce synthetic oil at all...
...Exxon blandly speculates that the population of Colorado's Rio Blanco and Garfield counties would rise to 1.5 million by 2000 as part of this effort...
...Something, yes...
...He liked to characterize synfuels plants as "little seedlings" that could grow on their own, but would dp ever so much better in the federal greenhouse...
...Exxon is now talking about an oil-shale industry producing, by 2010, the equivalent of eight million barrels a day—just what we import today...
...Back in Washington, Johnston was working hard to rescue the project from itself...
...But let's assume the prediction is accurate...
...Company representatives began barnstorming the country, trying everything from gentle persuasion to fear-andloathing...
...ANR believed that building a plant on a huge coal deposit in Beulah, North Dakota to convert coal into pipeline- quality synthetic natural gas would be a sensible, profitable thing to do...
...Big Oil is interested in producing coal only to the extent that coal's price can be tied to the artificially high price of oil...
...Everybody agrees that as long as the price of oil is in the hands of OPEC, there's something to be said for any substitute...
...The small amounts of crude-oil imports that oil shale would replace can be saved, far more quickly and cheaply, by improved conservation...
...But they had the good fortune to arrive at a time when Congress and the White House were casting about desperately for a technological quick-fix to the supposed "energy crisis...
...The aide explains: "Congress has just spent the better part of a year putting together a piece of legislation that will make Bill Murphy secure for life...
...Synfuels were at last a hit...
...You have to pay more for the fuel itself...
...Respected geologists, benefiting from new drilling techniques, were finding enough gas reserves to last for decades, maybe centuries...
...Synthetically high, one might say...
...But the oil companies care...
...When the company has no energy division, this, of course, isn't a problem...
...Nixon said he'd throw the government's weight behind synfuels...
...The scale and complexity of Exxon's proposal escalates from there...
...These mechanisms complement each other perfectly, with every price increase in oil improving the profitability of all Big Oil's other energy investments—like coal, for instance...
...In that case, conservation produces four times the possible benefit of synthetic oil, for a fraction of the price...
...Congressmen talk of this as some sort of new-found salvation, but in fact Lewis and Clark did the early research in the field...
...How to Keep It Going: Synfuels by Thomas N. Bethell I want energy...
...the raw materials still come from Nature's earth...
...And they want every pressure on that supply system to push for higher prices...
...We're left with only one phase of synfuels that might make sense, the 500,000 barrels of actual synthetic oil...
...If it requires 1,000 BTUs of energy to make 750 BTUs of synfuel, society takes a net loss on the transaction...
...Sometimes, when the enemy is upon you, you have to destroy in order to save...
...Meanwhile the total "equivalent" for all energy should hit 41 million barrels daily in 1990...
...But their cost will insure that future energy prices will be far higher than need be...
...The lead plaintiff was General Motors, the single biggest consumer of natural gas in the world...
...The catch is that the two million barrels produced and the eight million imported have nothing to do with each other...
...They came, like many before them, hat in hand...
...The star-spangled synfuels program is a preposterous hoax...
...they weren't likely to mass in protest...
...What with oil imports running at eight million barrels a day, two million barrels saved sounds like 25 percent...
...That the market fled in panic from synfuels became, in the leaderless confusion of Washington energy policy, some sort of proof that the idea was a visionary breakthrough...
...So why is Washington agog over synfuels, while cheaper avenues like conservation receive at best ritual lipservice...
...It sounds like an extraordinarily risky venture...
...Such logic has been overruled by the synfuels bill...
...Synfuels" are "synthetic" only in the sense that they require processing to alter their state...
...The uproar over Iran and the gas lines of spring 1979 had produced another round of ritual panic in Washington...
...Get those entrance requirements waived...
...The DOE had already been persuaded to give $25 million to the Great Plains project without strings, ? sort of graduation present...
...It owns pipelines that bring in gas from Canada, Oklahoma, Texas, and the Gulf Coast...
...The oil and natural gas we usually think of do not count because they flow out of the ground pretty much in finished form...
...Perhaps it's even true when you add to the "capabilities of private enterprise" an unsupervised tap into the federal Treasury, like the synfuels program...
...The Great Plains sponsors decided that if the project were abandoned, or produced syngas at embarrassing cost, a "surcharge" would quietly appear on customers' bills...
...A few reporters wrote stories suggesting that synfuels plants might not work, but nobody explained that even if they do work, they're a bad idea...
...Even by Washington standards, it's pretty depressing...
...Partners in the Great Plains consortium made it clear they would proceed only if insulated against all risk...
...So much for appearances...
...It wouldn't be inconsequential—according to some estimates, it might be $50 per average homeowner—but it could be spread out over a long time...
...Suppose there is a solution to the Net Energy Principle—some ingenious device that splits rocks for pennies...
...We can figure that out by following the history of a synfuels project...
...Back in gasland, even the no-risk plan was going awry...
...Just remember in what innocuous paragraph you heard them before...
...That number is open to doubt...
...But the persistent news of vast new gas fields troubled bankers most...
...Johnston put the language, now known as Section 127(e), into the bill...
...So far, free enterprise at its best...
...The company's directors and bankers were nervous about the syngas project, since it would only be practical if the natural gas shortage were real...
...Within a twominute walk of the White House, he found suitable offices for a brand-new trade association, one with a title that befits a brass nameplate: The National Council on Synthetic Fuels Production...
...You have to dig up a ton of rock for every barrel of kerogen...
...You must run it through an amazing array of cauldrons, pressure-cookers, and brobdingnagian double-boilers...
...Estimates vary, but most economists believe the total cost of re-designing and re-tooling Detroit cars to improve efficiency will be $10 billion to $15 billion...
...Suddenly, for synfuels, money just isn't a problem...
...This troubled bankers, who know that estimates are always ridiculously low...
...Murphy can relax now, but that hardly means he'll be inactive...
...They have little interest in making America "the Saudi Arabia of coal," as President Carter suggests, until after their oil is gone...
...And since a synfuel plant requires about four gallons of water for every gallon of output, you have to pump in the equivalent of a city reservoir every few hours...
...So the plucky consortium opted to nail its customers...
...Try $3 trillion...
...Let's trace it by following the tracks of a successful synfuels lobbyist...
...A conference committee usually consists of a handful of legislators...
...As the House Democratic Study Group's fact sheet declared, "The conference agreement is supported by the administration, the AFL-CIQ, and the United Mine Workers...
...Bowden, who heads synfuels development for Continental Oil Co...
...Consider that improvements in automobile fuel efficiency are expected to reduce transportation oil demand by two million barrels per day by 1990...
...Listen, if you think you can make BTUs out of bat guano, the blank check will soon be in the mail...
...Then disaster struck...
...It's all carrot...
...Nobody would buy it...
...These gashes would feed a network of 150 processing plants, each comparable in size and complexity to a major oil refinery...
...They worked out the basic system for "retorting" kerogen half a century ago, using extreme heat to decompose the oil so it would flow from the rock...
...The governments of New York, Michigan, and Ohio took the same position, arguing that their citizens shouldn't act as involuntary financiers...
...Where do you put it all...
...Once the Treasury has been milked for construction costs, the next round of lobbying will concentrate on setting the price subsidy sky-high...
...The BTU Triangle To the synfuels industry, the Net Energy Principle is like the Bermuda Triangle: everybody wants to believe it doesn't exist, but projects keep disappearing into it all the same...
...But while this desperation logic might apply to oil, it can't apply to natural gas...
...Everybody bought the act, especially the press...
...the Principle...
...They should have little trouble blending in with the 25,000 people who live there today...
...Businessmen have studied synfuels exhaustively since the 1950s, and always rejected them as folly...
...They'll produce synthetic natural gas, something that doesn't help cars—and something that nobody needs, considering the new-found abundance of natural natural gas (see "How to End the Energy Crisis," page 20...
...It's a federal rescue of an industry which did not, and could not, make it on its own in the marketplace...
...The consortium had badly miscalculated—its customers cared very much about the "surcharge...
...ANR had Murphy concentrate on the loan guarantee, but it was frustrating work...
...At last, opportunity lay at hand...
...In April, days before groundbreaking at the plant, customers got a court order delaying the project...
...It would be hard, but possible...
...ANR was already tapping that kind of money...
...They overwhelmed the 14 committee members from the House, aided by the fact that William Moorhead of Pennsylvania, a legislative lightweight, wound up as House conference manager...
...If oil were so short you couldn't get enough at any price, market comparisons would become moot...
...A diabolical factor called the Net Energy Principle specified that no matter what natural gas cost, syngas would always cost more...
...Once it's been popped, it's too big to put back in the trench it came from...
...So the word went forth to Murphy in Washington—get the Feds behind us...
...The theme of the synfuels bill is that we'll get OPEC's foot off our neck by spending whatever it takes ($20 billion to start, $68 billion or more later) to subsidize the development of a synfuels industry...
...More subsidies will be needed because for $88 billion you don't get a single ounce of fuel...
...It was a good thing for the Great Plains consortium that he did...
...First, you must dig up the coal or oil-shale...
...It owns coal mines in Kentucky, and leases federal coal properties in North Dakota...
...Ever since, people with money tied up in oil shale have been floating the idea that the rock's time has finally come...
...That was the free market rejecting oil shale on its own...
...The Net Energy Principle sticks like Krazy Glue...
...In most respects, the synfuels program—churning out unwanted substances at high prices using taxpayer subsidies—will make our energy situation worse...
...The entire process is so capital-intensive and complex, only abject desperation could justify it...
...The official panic about natural gas supplies was being replaced by whispered relief...
...After' World War I, when experts began predicting that the U.S...
...One primary means of duping has been the widely reported prediction that synfuels production will provide "the equivalent of two million barrels a day of oil by 1992...
...Oil shale, an oilbearing rock, counts as a synfuel because you have to munch the rock like crazy to get the oil out...
...In depressed Ohio, for instance, they spread the word that local manufacturers would enjoy $120-million worth of orders for Great Plains equipment if only opposition were dropped...
...It needed somebody to underwrite capital costs...
...To get the gas out would require that wellhead prices be deregulated, raising the price of natural gas...
...In 1805, they lit a campfire next to an oil-shale cliff...
...Don't worry about what those words mean...
...General Motors, Ford and the rest are happy to improve efficiency because this makes their cars better products that sell faster...
...Among them, they had profits of more than $1 billion in 1978 alone...
...ANR had been considering plans for a coal-gasification plant since 1974...
...The keystone of our national energy policy is, at last, being put into place," Carter said, just before his historic meeting with Arthur Seder...
...To make synfuels, you have to start by paying for real fuels...
...When Great Plains bankers finally grasped the Net Energy Principle in its totality— realizing their project would never be costcompetitive with natural gas—they began to panic...
...If he's wrong, we foot the bill...
...It came to be, in the immortal words of Senator Dale Bumpers, because "the people are demanding that we do something, even if it's wrong...
...Parts of Colorado, Utah and Wyoming hold enormous deposits of a rock called marlstone (actually not a shale at all), which contains the organic material kerogen...
...But there were dangers from the start...
...You can't use the resulting "soil" to reclaim land since it's devoid of nutrients...
...But there won't be...
...The cliff began to smolder...
...First, there is tremendous corporate opposition to conservation, an opposition reflected by malleable DOE officials and impressed on dazed congressmen...
...This is one occasion where market action has been entirely rational and should be accepted as a vital insight...
...Small-scale pilot plants should be built as soon as there is any indication a breakthrough has been achieved...
...But no such choice exists...
...The plant lost all reason for being...
...Can't wait to tell Kuwait to take a long walk off a short dock...
...To do so now would merely undercut their oil profits...
...It's had success in just about every business venture it's ventured, except one—synfuels...
...Far from it...
...Every time some energy sub-czar began to sound sympathetic, energy policy or DOE underwent one of its perpetual shake-ups...
...Suddenly, Great Plains looked like a billion-dollar Edsel...
...Gradually it blossomed into a 400- page Christmas Tree, with little gifts for biomass, kelp farming, solar towers, the Strategic Petroleum Reserve—no matter where you plugged it in, the Tree lit up...
...When considering a synfuels plant that makes oil, it's possible to see the Net Energy Principle in a slightly different light...
...Coal is the raw material for most synfuels, and coal companies are largely owned by oil companies, their "competitor...
...Under the language of Section 127(e), the government also "requests" the privilege of underwriting the rest of the project...
...A big energy-based conglomerate could (and should) make a good profit selling high-efficiency home furnaces...
...Market failure is what drove synfuels advocates to Washington in the first place...
...It is because conservation reduces the demand for fuel, disrupting highly profitable supply arrangements...
...Marlstone expands during retorting, in what chemists call the "popcorn effect...
...The lingering "crisis" atmosphere offered the only rationale for the plant...
...By 1978, they had cobbled together a consortium to spread the risk...
...The cost of such a program...
...only a fool would want its product...
...Guaranteed Annual Guaranty If you fail the test of the market place, the next step in contemporary business is to get someone to alter your transcripts...
...Meanwhile the psychology works in reverse...
...But the Great Plains bail-out provisions sailed through intact...
...Having 65 participants spread the risk as thin as phyllo dough...
...Kerogen is similar to crude petroleum...
...Similar opportunities exist in other industries besides cars...
...So they pledged 25 percent of the billion-<loilar construction costs, arranging for a syndicate of 60 banks to put up the balance...
...Under the aegis of a new federal Synthetic Fuels Corporation, whose main function is to construct a conveyor belt from the Treasury to corporate coffers, the synfuels industry is supposed to turn our enormous coal and oil-shale reserves into something that will run your wheels...
...The idea is syn-oil production from oilshale— essentially oil from a rock...
...Since then, dozens of mergers have dimmed any promise that coal and oil would ever be competitors...
...But this wouldn't help Great Plains...
...In short order^ the Senate Energy Committee began taping together a bill incorporating practically every notion ever dreamed up by a needy corporate constituent...
Vol. 12 • October 1980 • No. 8
