The picturesque state of Montana, in northwestern USA, could become the next playground for energy consumers if governor Brian Schweizer gets his way. He's currently courting energy producers to invest in his state in the hope that their coal-rich mountains could be mined to produce diesel.

Could this be the saviour of the energy crisis as oil heads over the US$70 per barrel price tag? Possibly. However, coal-to-diesel projects are extremely expensive costing more than US$6 billion to produce a mere 80,000 barrels per day (less than 0.5% of the US daily required oil diet). Their operating costs are high and unless oil stays well above US$30 - 35 per barrel they would become a loss making venture. But then is oil about to drop below $35 per barrel in the short term? Possibly not. Analysts are predicting an increase in the price up to $270 per barrel within the next 5 years.

The risks are huge and it's not the first time this has been attempted. The 1970's saw a whirlwind of projects start up and fail due to the drop in the oil price. However, the oil price horizon seems a little easier to define and forecast now than in 1970.

Source: South Africa has a way to make oil from coal