Actually, we can "dig up" hydrogen, as well. Coal gasification very nicely produces large quantities of it (the final product syngas is pretty much carbon monoxide and hydrogen). Separate them, burn the carbon monoxide in gas turbines to produce electricity at the mine-site and for transmission locally, and send the hydrogen off by pipeline to wherever it is needed. We have MORE coal reserves in the US than Saudi Arabia has oil.
I like the idea. How complete is it to burn CO from H2? Is it dangerous to burn something when H2 is around? Like Hindenburg.
But that takes energy as well. Any kind of separation process will, and that means losses, more or less. I'm not saying its impractical and may very well end up being a good way to beef up our domestic supply of hydrocarbon products and/or viable substitutes, but its still going to take a reliable and robust supply of primary energy.
One thing about hydrogen-powered vehicles that people often gloss over is the energy density factor. You just need more of the material on a volume/weight basis to get an equivalent amount of power compared with gasoline-powered ICs. That means pressurized tanks if you stick with gaseous forms, or specialty-engineered cryotanks for liquified H2, which will have its own issues. So to go the same number of miles you either have larger on-board storage, or you have to "gas up" more frequently. Or am I missing something?
A good energy balance analysis of the H2 vehicle would be helpful, especially if liquified H2 is envisioned. Not only do you use energy to make the H2, but you use energy to liquify it. Losses during processing steps like these tend to add up.