Why does the commercial use of coal gasification and liquefaction depend on oil and natural gas prices?

The commercial viability of coal gasification and coal liquefaction is primarily driven by the relative cost of production compared to conventional petroleum and natural gas.

Because coal is a hydrogen-deficient hydrocarbon, converting it into liquid or gaseous fuels requires complex, energy-intensive processes to add hydrogen. Historically, these conversion methods have been more expensive than extracting and refining crude oil or natural gas. Consequently, interest in these technologies typically surges only when oil and gas prices rise steeply, creating supply shortages or making conventional fuels prohibitively expensive.123

When market prices for oil and gas are low, the high operational costs of coal conversion render it commercially unattractive. Conversely, during periods of high energy prices, these processes become more economically competitive, prompting renewed investment in technologies designed to transform coal into viable energy alternatives.23