ARABIA IN AMERICA

No, this is not about the coming Islamification of America or similar conspiracy theory.  It's about energy independence, and how crucial that is to defeating Islamofascism.

Remember that "senior White House official" that I talked to yesterday (1/10), mentioned in The Bright Side of 2007?  Here's another thing he told me:

You'd be amazed at how much time we waste in the White House worrying about some tribal chief in Nigeria, a nutcase in Venezuela, Sunni-Shia nonsense in the Middle East, or how best to walk on Saudi eggshells, all because of oil.  We have got to be free of all this.  Almost no issue involving national security is more important than energy independence.

So Bush is set to go to war with the Democrats about getting oil out of Alaska and off our continental shelf.  But after the official talked about this, advances in battery technology, coal-to-oil, and such like, I asked:  "Have you considered how much the depreciation schedule prevents us from producing more energy?"

That got a blank stare.  I plunged ahead.

We're about the only country in the world that forces companies to write off the cost of their capital assets over years, sometimes decades, instead of letting them be expensed.  It's like loaning all those millions or billions to the IRS at zero interest.  That's why Intel will build a chip plant in China and not here because in China they can write off the entire cost right away.  So if you want energy companies to spend billions in new refineries or coal-liquefaction plants, etc., abolish the depreciation schedule and let them expense the capital cost – that and get the EPA out of the way.

He laughed and said, "That last part is the toughie," but I could see the brain wheels turning.  We'll see what comes of it.

The most critical point to understand regarding America's dependence on foreign oil (11 million barrels a day imported now) is that it is a political problem:  government in the way, government policies preventing us from producing our energy needs ourselves.

Take reserves.  We'll always be running out of oil or gas or coal in twenty years or so in perpetuity because the larger a company's reserves, the more taxes it has to pay on those reserves as an asset.  A study done on this at MIT done by a friend of mine a few years ago determined that at present consumption, the US has enough coal to last 5,000 years.

The US is the third largest oil producer, after the Saudis and Russians, in the world.  We have gigantic reserves of natural gas, especially along our continental shelves.  But both are dwarfed by coal.  It's an understatement to say the US the Saudi Arabia of coal.  The US has far more coal than the Saudis have oil – far more oil if liquefied from coal.

So I wasn't surprised to see TTP member Todd C.'s prediction (not in You Predict last week as I waited until now) that:  "Coal-to-Liquid technology will be recognized as the only practical, long-term solution to this country's hydrocarbon needs."

What I'm going to predict is a political war over coal-to-oil (or coal liquefaction) – not between Republicans and Democrats for that's obvious, but what will be far more fun, between Democrats and Democrats.

On one side you've got the greenie eco-fascists like Barbara Boxer who is going to offer legislation out of the Senate Environment Committee which she now chairs to ban all coal-burning power plants in the entire country. Such plants produce 54% of America's electricity.

That's how much of a religious wacko she is, worshipping at the Church of Global Warming.  The Enviro-Dems are about to declare war on coal.

One the other side you've got, drum roll, please… Barack Obama.  Last week, he and Republican Senator Jim Bunning introduced the Coal-To-Liquid Fuel Promotion Act of 2007.  Both Obama's Illinois and Bunning's Kentucky have massive coal reserves.  As does Montana, so Max Baucus is behind the bill.  Same with Bobby Byrd and John Rockefeller in West Virginia.

It takes about one ton of bituminous coal to produce two barrels of oil.  Remember that MIT showed real reserves are much larger than current ones, but even with current reserves, the number of barrels of oil that can be produced from these states with coal liquefaction are:  Illinois, 76 billion;  Kentucky, 30 billion;  Montana, 150 billion;  West Virginia, 36 billion.

Of course, Republican Senators will be on board as well, like Mike Enzi and Craig Thomas of Wyoming (80 billion), and Arlen Specter of Pennsylvania (24 billion). 

Add up these states alone (for there's lots more in other states but smaller reserves) and you get close to 400 billion barrels of oil, dwarfing the Saudi's 270.  Coal-to-oil means Arabia in America.

And the global warming greenie wackos will do anything they can to stop it.  Particularly those on the Democrat side of the aisles on Capitol Hill. 

So, Todd, get a ringside seat and be ready to enjoy the biggest cat fight that Capitol Hill has seen in a long time.  Remember that while Democrats can be gutter vicious when they're fighting Republicans,  that's like kisses and roses compared to when they fight each other.

Hundreds of billions of barrels of oil are at stake, which means trillions of dollars are at stake, versus "saving the planet" from the horror of "greenhouse gas" emissions of carbon dioxide produced by all those barrels.

(I can't resist this.  Do you know the largest greenhouse gas, of which there is immensely more of than carbon dioxide or methane?  Water vapor.  Maybe we could get greenies like Boxer to freak out about water vapor.)

We're not in Alaska anymore, Toto.  The wackos could worship the caribou on the North Slope and stymie oil extraction from a frozen wasteland because Alaska doesn't have many votes and its reps in Congress don't have the heft.  We're talking heavy hitters on Capitol Hill here from big Lower 48 states. 

Coal-to-oil is a mature technology.  It's ready to go.  The coal is there, ready to be used.  The fight over it has begun.  Enjoy the circus.

Oh, and Senator Jim Inhofe (R-OK) will be introducing a bill to eliminate the depreciation schedule and allow full expensing for the capital expenditures of US energy companies.