An article from Reuters draws attention to one of the system’s most recent attempts to extend its (ultimately doomed) existence as long as possible: getting around oil shortages by transforming coal into liquid fuel on a massive scale.

Coal-to-liquid (CTL) technology was developed approximately 100 years ago, but has only ever been used by Nazi Germany and apartheid South Africa, which confronted critical fuel shortages. Now a rush to put this technology into use is on, spearheaded by China, Australia, India and the United States.

The quadrupling of oil prices in the last decade has suddenly made CTL financially appealing: while oil costs approximately $130/barrel, the Oil and Gas Journal has projected that CTL fuel can be produced for $67 to $82 a barrel. The ultimate cost would be determined by prices of water and energy sources, as the process uses massive amounts of both water and electricity.

CTL fuel also releases twice as much carbon dioxide as more conventional fossil fuels.

In the United States, where the government and energy industry hope to capitalize upon abundant coal reserves to create more “energy independence,” a CTL push is on for the inter-mountain West. Construction is due to start on a plant in Wyoming in 2009, in a partnership between DRKW Advanced Fuels and Arch Coal Inc. Companies developing CTL technology include General Electric and Exxon Mobil. The US Department of Defense is also investigating the use of CTL.