OIL FROM COAL

Grey River Argus, 31 March 1933, Page 2

OIL FROM COAL

Costs Aspect INTERESTING FIGURES. Recent advices from Great Britain indicate that substantial headway has been made in the process known, as coal hydrogenation. As a consequence oil obtained from coal is being used commercially in several important enterprises. An article published recently in the London “Economist” throws cold water on the scheme. The “Economist” states: — “A plant capable of producing 210,000 tons of petrol per annum (say 6C million gallons), would cost approximately £7,000,000 to instal. This plant could produce a petrol similar to a 50 per cent, benzole, 50 per cent, straight American petrol mixtures at a price of 9d a gallon at works allowing for capital charges at 15 per cent, to cover interest and depreciation. Reckoning 4d a gallon for distribution, retailing, etc., and, say, Id to 2d for profit, this petrol could be available to the public for Is 2d or Is 3d a gallon. “The proposition, thus stated, appears superficially attractive; but there are other important considerations which have to be borne in mind. On the basis of present market prices, imported petrol can be landed in the Thames at about 31d per gallon, and its retail price includes an excise duty of 8d per gallon. If that excise duty were imposed equally on hydrogenated petrol, its retail price would be at least .Is lOd per gallon, and hence uncompetitive. On the other hand, if it were exempt from the duty, the. State would lose a revenue of the order of £2,100,00‘) a year on each hydrogenating* unit of the dimensions referred to above. That is to say, since such a plant would consume about 735,000 tons of coal per annum the loss of excise revenue would

be the equivalent of a subvention of £2 17s 2d per ton of coal used, or, reckoning output per man at an average of 300 tons per annum, a subsidy of £857 2s lOd per annum per miner brought into employment by the hydrogenation process. Moreover, even if the whole of our present consumption of imported petrol were to be met by the hydrogenation process —and this would mean a capital expenditure of £116.000,000 and an annual loss of revenue, if no -excise duty were paid, of £35,000,000 —the total consumption of coal would be less than, three weeks’ output of the coal industry ‘‘Thus, when allowance is made for the displacement from service of ‘tankers,’ ami the fact that labour employed in hydrogenation plants themselves would be merely transferred from existing petroleum refineries, the attractions of coal hydrogenation as :i means of stimulating employment are much loss obvious than at first sight would appear, and are outweighed by the financial factors. Tn fact, the only eventuality which would place the hydrogenation process at its present level of costs, on an economic basis would seem to lie a steep rise in oil prices. Since there is more oil in sight to-dav than at any time in the history of the petroleum industry, and since the cost, of drilling has been remarkably cheapened, the prospect of dear petroleum is scarcely one which would warrant the resources of the State being placed behind a process for the production synthetically of a commodity which is already being- over produced in its natural form. ’’