America has abundant fossil fuel resources, and an enormous fossil fuel appetite. But the majority of our resources are in the form of natural gas, while nearly all of our usage depends on liquid gasoline made from crude oil. That’s why the announcement last week by a California company that it has a new technology for converting natural gas to liquid fuel in an economical manner is so exciting. We may, someday soon, be able to use natural gas in our cars at a price competitive with gasoline.

Siluria Technology, a small San Francisco operation, says it has found catalysts that make the conversion of natural gas to liquid fuel cheaper and easier than it has ever been. CEO Ed Dineen says he has been working on the problem since the 1970s when he became interested in finding a use for the huge amounts of natural gas that were “stranded” in Prudhoe Bay, on the northernmost coast of Alaska.

“Economical gas-to-liquid technology is something that the industry has long sought after,” said Dineen, who was formerly CEO of the chemicals company LyondellBasell Industries NV. “It’s a kind of a holy grail.”

Both natural gas and coal have been synthesized into motor fuel since the 1920s by using a process called the Fischer-Tropsch method, but this technique is both costly and energy-intensive, and has never been economical except under the most extreme circumstances. The method was invented in 1922 by German scientists Franz Fischer and Hans Tropsch at a time when the Germans led the world in chemistry but had no domestic oil reserves. The process aroused little interest until the 1930s, when Hitler began to isolate Germany and build up its military. For the better part of the decade both France and Britain were confident that another war could not start because Germany had no oil to fuel one. But by 1943 Hitler had built 13 synthetic fuel plants that were supplying half of Germany’s oil needs. The Allied bombing of those 13 plants hastened the end of the war.

The Fischer-Tropsch method got another lease on life when South Africa used it to synthesize oil from its abundant coal supplies during Apartheid. The effort gave birth to Sasol, which has become the world’s largest manufacturer of synthetic fuel.

Royal Dutch Shell is the other player in the field, having built a smaller, 140,000-barrel-a-day conversion plant in Malaysia. Shell made its first shipment of commercial gasoil in 2011. The company has since completed a second phase of the plant that expanded it even further.

Still, apart from Sasol’s, all these facilities are dependent on the Fischer-Tropsch method, which remains expensive and cumbersome. But Dineen claims he has developed a catalyst that cheapens the process. He worked on it in Alaska, but the catalyst tended to fall apart after one or two uses. Innovations such as nanowire technology now test the catalyst and speed up the trial-and-error process.

“It makes finding what works more affordable,” he says.

Several other small companies are also dabbling in the process of trying to arbitrage the price difference between oil and gas. Natural gas prices used to be keyed to oil prices but have now broken out on their own, creating a large gap between the two. If economical ways can be found for converting gas to something that can be easily used in cars, it will be cheap enough to catch the ordinary consumer’s attention and provide a domestic market for a valuable domestic resource.

Velocys is a company that is trying to make gas-to-liquid conversion economical on a much smaller scale. Their targets are remote wells in the Bakken and other oil fields where natural gas is viewed as a dangerous waste product that just gets flared off — a huge waste of resources. Velocys’s system is designed to turn that waste into profit, with a small, portable, modular conversion system that can be deployed in isolated locations. Pending laws that would penalize companies for flaring gas could create even more demand for Velocys’s technology. The company currently has a joint venture with Waste Management to build its first small-scale gas-to-liquid plant.

Another company is Petro River, which has developed and patented another alternative to the Fischer-Tropsch method known as the Havelide System. The company says it has a molten salt catalyst that operates at half the cost of Fischer-Tropsch.

“What I like about the two small companies is their intention to try and provide a solution to rescue stranded natural gas assets and capture the huge amounts of natural gas that is wasted through flaring,” Devon Shire wrote on Seeking Alpha. “Those are two issues just waiting for a big solution.”