Synthetic Fuels

August 31, 1979

Report Outline
Search for Oil Substitutes
Development of Synthetic Fuels
Potential Environmental Effects

Search for Oil Substitutes

Carter's Program for Synfuel Development

Synthetic fuels have never been an important part of the U.S. energy picture. But what some are calling “synthetic fuels fever” broke out in Washington this summer. Spurred primarily by the long gas station lines that had appeared across the nation, the House of Representatives passed a bill in June to boost U.S. production of synthetic fuels — primarily oil derived from coal and shale rock. Then on July 15, President Carter called for an $88-billion, 10-year program to produce 2.5 million barrels of synthetic oil a day by 1990. If approved by Congress, Carter's program will put in motion one of the most extensive technological and financial ventures ever undertaken. His energy proposals are likely to occupy much of Congress' time for the rest of the year. Senate action on the House-passed bill is due to resume soon after the lawmakers return from summer recess on Sept. 5.

Building a synthetic fuels industry today has been compared to the two other huge American scientific undertakings of the century: development of the atomic bomb and putting astronauts on the moon. It faces some large hurdles; foremost is the matter of financing. Analysts say that each major synthetic fuel plant will cost about $1 billion to build. Few companies could undertake such a project without generous government financial support. And no matter how high the per barrel price of imported oil is at any time, the projected price of a barrel of synthetic oil is substantially higher. There are also serious questions about the environmental effects of a large number of synthetic fuel plants. “These are not nice plants,” Robert Hanfling of the U.S. Department of Energy said recently. “These are big, dirty plants. Everybody wants these plants — but wants them someplace else.”

Looming above the synthetic fuels question is the fact that the world is slowly but surely running out of oil. As the situation has been summed up by Business Week, the world is now entering “the end of the petroleum age.” “For the first time since oil became a major source of energy,” the magazine said in a recent special report, “the world's factories, fleets of automobiles, and other users are burning oil at a faster rate than it is being discovered.” According to the Department of Energy's 1978 annual report to Congress, the non-communist world consumed some 20.6 billion barrels of oil last year. But only about 14 billion barrels are being discovered annually. Although there are hundreds of billions of barrels in reserves, the fact remains that most experts see the inevitable end in the decades ahead. It is agreed that the United States now needs a long-range energy plan based on sources other than oil.

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