Probably almost nobody here knows about this. I sure didn't before reading this article. I'm surprised journalism this high in quality still exists at a disaster of a publication like Time.
http://www.cnn.com/...
Basically, what happened was that, in 1980, Congress passed a tax credit to encourage companies to turn coal into diesel fuel via the Fischer-Tropsch process, to reduce our dependence on foreign oil. This is the thing that Governor Schweitzer of Montana has been pushing, and is probably a good idea.
Thing is, Congress worded the law based on the tax credits so that you could get them by performing any chemical change to coal. So, wiseass companies started performing the cheapest chemical change to coal as possible, and turned coal into...coal. Then they could get the full tax credit. One company lost $400 million turning coal into coal, but got $852 million in tax credits, for an actual profit of $452 million, paid by the taxpayers.
It gets better. The original law was assuming companies were going to make diesel or other oil-based products out of the coal, so they put an expiration into it. If the price of oil went above a certain level, the tax credits would be phased out, since it was assumed the companies could then make a profit without them. Oil prices are now above this level.
Republican Senators Charles Grassley, Gordon Smith, Rick Santorum, and Orrin Hatch have, after intense lobbying from these companies get billions of taxpayer dollars doing nothing, have added a provision in the Tax Relief Act of 2005 stating that the price of oil used for the credit was "the amount which was in effect for sales in calendar year 2004." In 2004, oil was cheap enough that the full tax credit applied.
Fortuantly, the provision is not in the House version of said bill, and the Republican leadership in the House is said to be against it, but who knows if it will survive the final budget reconciliation process. But it just goes to show how many stupid hidden things are buried deep in the various bills that get passed in Congress every day.