TRUE. THE DEVELOPMENT of new coal technologies is valuable insurance against future fuel shortages. Two questions: How big an insurance bill does the country want to run up? And how should the country pay for it - through higher taxes or higher fuel bills? A consortium of five big pipeline companies proposes to build a $1.5-billion plant in North Dakota to make gas out of coal, on a commercial scale. The gas would cost several times as much as the most expensive gas from conventional wells. While it's a good chance that the plant will operate successfullY, it's not a sure thing.
This huge project depends on federal approval of a rate structure that will permit the pipelines to pass the cost on to their customers, regardless of technical failure, regulatory delay or litigation. Their customers are, ultimately, some 20 million businesses and householders - including, incidentally, everybody in the Washington area who uses gas.
The rate is now being hotly debated in hearings before the Federal Energy Regulatory Commission. The Carter administration vigorously supports the project. Deputy Secretary of Energy John O'Leary, testifying before the commission last week, argued that it's urgently important to get pilot plants operating in as many different technologies as possible. In the event of the predicted worldwide oil shortages, those plants would then be the base on which to swing the economy to other fuels. The opposition to this coalgas project is being led by the commission's staff, which says that the plant is too expensive and that it's wrong to lay the burden of a cumbersome, uncompetitive technology onto the consumer.
As a matter of market economics, the opponents are obviously right. It's absurd to build plants producing gas at $5.60 or more per thousand cubic feet if your purpose is to fill a shortage that the government created by controlling natural-gas prices at one-third that level. The recent gas discoveries in this country, Canada and Mexico further weaken the case, in terms of gas supply.
But there are a couple of powerful reasons to go ahead with the coal-gas process despite the fierce costs. Even if there is no sudden worldwide oil shortage in the 1980s, this country is going to have to rely more heavily on coal. But coal smoke is poisonous. It is imperative to develop methods of using coal that do not drive up the death rates in the industrial cities. The decision on the North Dakota coal-gas plant is an investment in a technique for using coal without burning it. Unfortunately, the Energy Department has trouble talking candidly about this side of the case because of the administration's commitment to greater reliance on coal.
The proper comparison is not with natural gas, but with the costs - in money and pollution - of generating electricity with coal. Turning coal into gas and burning that gas in furnaces is a cheaper way to heat homes than burning coal to generate electricity for electric home heating. It is also a great deal cleaner and healthier.
On balance, it's wiser to make the investment in the North Dakota plant and get this technology into operation. This kind of development is sometimes done with government money, provided by the tax-payers. But it's better public policy to charge it to the people who use the gas. What do they get for it? They get a greater degree of assurance that supplies will hold up in the years ahead.
A good many consumers will resent having another expensive plant loaded onto their monthly gas bills. Perhaps they will also object to having public policy of this importance settled in an obscure proceeding before a regulatory agency. But we might observe that every consumer has a vote in this issue.
It's not the conventional kind of vote, but it's effective. If consumers want to slow down the rate at which high technology and big plants are being loaded onto their fuel budgets, they can cast their votes by insulating their attics, installing storm windows and buying more efficient appliances. Unilities' investments are extremely sensitive to their customers' demand for gas and electricity. There have been cancellations of power plants all over the country in the past couple of years because consumption of electricity is no longer growing as fast as it used to. Synthetic gas is the expensive way to make supply match demand. The cheap way to do it is through conservation. But businesses and homeowners have to do that for themselves.