There is more energy contained in the coal under Illinois than in the entire oil reserve of Saudi Arabia. Some are taking this as very good news, and the likely flag-down for a new industry, based upon the Fischer-Tropsch process, in which carbon is partially oxidised to carbon monoxide (CO) which is reacted with hydrogen at moderate temperatures (say 300 degrees C.), usually over an iron or cobalt catalyst, to produce a mixture of liquid hydrocarbons that might serve as liquid fuels for transportation or as higher molecular weight waxes and lubricants. The main sense of this good cheer is, naturally enough, over the potential access to a new source of gasoline, meaning that it will be unnecessary to change our lifestyles one iota - keep on putting more Hummers on the road and don't even bother to tune the engines - and all of this inertial benefit with the additional convenience of breaking western dependency on imported oil, particularly from the Middle East and other sensitive and potentially fickle regions of the world.
There are, even the optimists agree, some drawbacks to this bright horizon, however. For a start, to implement the technology on the scale necessary to supply the U.S., which uses one quarter of the entire world's production of oil (and wants more of it, in competition with China - an interesting tug-of-war game) would require an enormous capital investment, and the implementation of a Manhattan Project scale infrastructure. By this, I mean that the level of resource needed to be thrown at the problem would leave little left for other kinds of exploration and development, for example of renewable energy sources, and long-term nuclear energy production, e.g. using thorium as the fuel (by breeding it into uranium-233). Given that economic considerations are the only ones that actually make anything happen, there would need to be confidence that an immediate fall in oil prices was highly unlikely, otherwise cheap imported hydrocarbon stocks would continue to dominate the market. A viable scenario for coal to oil conversion depends on imported oil becoming harder to get both for reasons of geology and politics, and hence inexorably more expensive, following the downward side of Hubbert's Peak, which inevitably follows the maximum in oil production, known as "Peak Oil".
The Fischer-Tropsch process was developed in Germany in the 1920's by Fischer and Tropsch, working at the Kaiser Wilhelm Institute for Coal Research, and became important during WWII when naval blockades curtailed much of Germany's petroleum imports. That same technology also kept South Africa running when the world shunned the apartheid regime there and imposed sanctions on trade, which included oil imports. Sasol, the company that has used Fischer-Tropsch technology for many years in South Africa, is conducting a feasibility study on the construction of two giant coal-to-liquids plants in western China. It is no surprise that China, given its own seemingly unquenchable thirst for oil and each and every other source of energy, would be considering joining a new OPEC type club, but based on oil generated from coal (which currently provides 75% of the country's entire energy), albeit mostly for home consumption.
From an environmental perspective, the prognosis looks as a rather sorry vista. This is a highly carbon intensive technology. Energy is needed to run the plants, mine and process the coal, processes which will all produce CO2 in addition to that released when the synthetic liquid fuel is finally burned in internal combustion engines, or some of it in power plants for electricity production. This is the underlying point, that to be any use as a fuel, hydrocarbons have to be burnt in some way (even in a fuel cell), and that produces CO2. Therefore, environmentalists and anyone at all who is worried about the outcome of the "Great Climate Experiment" that we are all taking part in, will surely wring their hands at this whole notion. It is expensive, dirty, and frighteningly appealing because it is a "business as usual" scenario in which we are buffered from confronting decisions about how to change the devil-may-care way we live now into a sustainable future. There are too many of us, asking too much of the Earth... Something will have to "give" at some point, and the sooner we face up to that eventuality, the easier the transition might be. We should quit while we are ahead; while we still have enough resources left to make choices.