Dear Senator:
Taxpayers for Common Sense (TCS) Action urges you to oppose amendments to the Defense Authorization Bill (H.R.1585) that would provide the Department of Defense the authority to enter into long-term contracts with coal-to-liquids (CTL) facilities. Taxpayers were stuck with tab after the CTL industry collapsed in the 1980’s. Entering into long-term contracts with this industry today is just as risky an investment as it was two decades ago.
The success of coal liquids depends heavily on volatile oil prices, so entering into long-term contracts would be particularly risky for the federal government. If oil prices drop from their current record highs, it could devastate the CTL industry and leave taxpayers footing the bill. When Congress created the $15 billion Synthetic Fuels Corporation in the 1980’s to fund CTL and other synfuel projects, a drop in oil prices drove the CTL industry into near bankruptcy, wasting billions of dollars spent on capital. This time around taxpayers would be forced to purchase uneconomical fuel.
Last week in the Wall Street Journal, James Woolsey, former director of the Central Intelligence Agency and a strong advocate of reducing U.S. dependence on foreign oil, expressed serious skepticism at the military’s involvement in coal to liquids technology stating, “Right now, coal-to-liquids looks to me to be pretty darn low on the reasonable list of alternatives.”
Coal liquids are not the solution to the nation’s energy woes and industry and independent experts agree that this technology will require significant government support. Taxpayers should not be forced to foot the bill for this expensive technology. To replace just 10 percent of America’s oil consumption with coal-derived fuels could cost taxpayers $70 billion in construction costs. And this is just the beginning of the costs. These estimates do not include the additional coal mining and carbon sequestration costs.
TCS Action urges you to oppose any amendments to provide authority to enter into long-term contracts with coal-to-liquid facilities or other subsidies for this technology. The synthetic fuels push of the early 1980’s failed and there is no need to repeat this costly mistake. If you would like additional information please contact me or Autumn Hanna at (202) 546-8500 or autumn@taxpayer.net.
Sincerely,
Ryan Alexander
President
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