The United States has the world’s largest coal reserves and Montana the highest potential for mega-mine development. Consequently, a large-scale effort to convert coal to liquids (CTL) has been proposed to create a major source of domestic transportation fuels from coal, and some prominent Montanans want to be at the center of that effort. We calculate that the energy efficiency of the best existing Fischer–Tropsch (FT) process applied to average coal in Montana is less than 1/2 of the corresponding efficiency of an average crude oil refining process. The resulting CO₂ emissions are 20 times (2000%) higher for CTL than for conventional petroleum products. One barrel of the FT fuel requires roughly 800 kg of coal and 800 kg of water. The minimum energy cost of subsurface CO₂ sequestration would be at least 40% of the FT fuel energy, essentially halving energy efficiency of the process. We argue therefore that CTL conversion is not the most valuable use for the coal, nor will it ever be, as long as it is economical to use natural gas for electric power generation. This finding results from the low efficiency inherent in FT synthesis, and is independent of the monumental FT plant construction costs, mine construction costs, acute lack of water, and the associated environmental impacts for Montana.