There’s a silver lining in those high gas prices

Published 12:50 am Sunday, May 25, 2008

High oil prices may ultimately be a good thing for the Miss-Lou.

Stick with me here because this one is going to require some explaining.

Now before you start asking, Mom (one of my few faithful readers), I haven’t been smoking any “Bill Clinton” cigarettes or drinking heavily.

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I’m just trying to be optimistic here.

And let me tell you, finding a drop of optimism as you watch the dials on the gas pump spin up to enormously high amounts is difficult.

But hope springs eternal and my optimism comes from an e-mail sent to me this past week from Bazile Lanneau Jr.

The e-mail contained a link to a Wall Street Journal article about how the U.S. military is now pushing an alternative fuel plan.

The only problem is that despite America’s great minds, we haven’t invented a solar-powered, tactical fighter jet or a wind-powered tank.

Quite simply, U.S. forces use lots and lots of petroleum products — some 340,000 barrels daily, as reported in the Wall Street Journal.

And the pain in the military’s wallet is thousands of times the pain each of us feels at the pump.

Aside from the massive cost, much of our petroleum supply comes from countries that often don’t like us. That means we’re at extreme risk should they opt to flip off the spigot one day.

So the military is finally looking for solutions in the form of synthetic fuels.

The U.S. Air Force, the WSJ article reports, wants to be able to purchase 400 million gallons of the stuff by the year 2016, or approximately 25 percent of its total homeland missions.

So what does that have to do with the Miss-Lou?

All of this national attention to synthetic fuels should bode well for Rentech, the company looking to build a synthetic fuels plant at International Paper’s former Natchez mill.

Rentech is a technology company intent on making synthetic fuel using what began as German technology to process coal to liquids fuels.

Rentech recently obtained Mississippi Gov. Haley Barbour’s blessing to obtain $175 million on GO Zone Bonds. That’s a first key step into raising money for the Natchez plant’s construction.

Another key step is likely to require either a big gamble on investors’ part or a change in federal law.

At present, the Air Force can only contract with a company for five years. That’s not really long enough for investors in companies like Rentech to feel comfortable that they’ll be able to get their investments back before a five-year contract is up.

Rentech is finishing up a small-scale test plant in Colorado, but haven’t fully committed to putting a large-scale plant yet.

“It’s a chicken and egg thing: We’ll build a larger plant if we can get the money to finance it and find customers willing to buy what it produces,” said Rentech’s VP of commercial affairs Rick Penning, quoted in the WSJ article.

Cracking the “egg” would be much easier for investors if the federal government could commit to a long-term contract and a commitment to become less risky when it comes to the nation’s security.

And I, for one, keep hoping that happens as the numbers at the pump keep climbing. Let’s hope for that silver lining soon.

Kevin Cooper is publisher of The Natchez Democrat. He can be reached at 601-445-3539 or