The obvious solution is liquifaction of natural gas into gasoline, diesel, etc, using the Fischer-Tropps process. The same can be done with coal, albeit at a higher cost.
http://en.wikipedia.org/wiki/Fischer-Tropsch_process
Lqiufaction of natural gas into POL is price-competitive with normally drilled oil when the price per barrel of oil is about $45-$50 (and about $60 a barrel for coal liquifaction). The major obstacle is the capital investment necessary, which requires a risk premium.
Large-scale conversion of natural gas and coal to POL might not happen for a long time given that shale oil can now be fracked for about $35-$40 a barrel POL equivalent. Israel is about 15-20 years out from really massive, Persian Gulf scale, deep shale oil production, via fracking. See:
http://opinion.financialpost.com/2011/06/10/israels-new-energy/
Once the Israeli pilot project comes on line in about two years, I expect Europe to start developing its own shale oil with the same process.
Correct....as far as it goes. The demands for carbon sequestration that will be acceptable (HAH!) to the watermelons are what pose the most risk, delay and expense.