by Richard R. Loomis and Susan Salter
“I’ve been an oil man all my life, but this is one emergency we can’t drill
our way out of.”
On the heels of President George W. Bush’s lifting of the executive ban on
domestic drilling, these can be construed as fightin’ words. As can this statement,
made to the New York Times about Bush’s edict: “I don’t call that a plan. You’ve
got to cut the imports, because if you’re importing 70 percent of your oil,
you have a security problem. Can you imagine how crippled the country would
be if you had it cut off?”
An American public fed up with $4 gasoline is increasingly taking to heart
the ideas of T. Boone Pickens, described by the New York Times as the “legendary
wildcatter and corporate raider.”
Now the 80-year-old can add “would-be renewables pioneer” to that résumé. Earlier
this summer, Pickens, owner of the Clean Energy Fuels Corp., vaulted into the
headlines with an energy plan that appears to divert drastically from Bush’s
efforts. The oil baron has committed $58 million to an ad campaign promoting
the “Pickens Plan,” with the price tag for the entire project estimated at
$1.2 trillion.
Pickens “does not oppose drilling,” the New York Times pointed out. “He’s been
doing it for most of his life. Nor has he become a born-again eco-warrior.
… But he knows something that his friends in the White House won’t acknowledge:
that a nation holding less than 3 percent of the world’s oil reserves while
guzzling 20 percent of the world’s production will never be able to drill its
way out of its dependency on foreign oil.”
In a nutshell, Pickens proposes harnessing wind power – using turbines based
in America’s gusty Midwest – to replace natural gas as a key feedstock of the
electrical grid, eventually providing 20 percent of the nation’s electricity
needs. The saved natural gas can then be diverted to the transportation fuel,
which Pickens says will reduce foreign oil dependency by up to one-third.
One would think that the “green” crowd would fall in love with Pickens. House
Speaker Nancy Pelosi (D-Calif.) has invited him to talk to Congress even as
she would not let the Congress debate energy. However, the left is also quick
to take credit away from T. Boone because of his potential for personal profit.
Pickens accompanied his energy plan with some public relations. The country’s
117th-richest person maintained that his new advocacy of alternatives would
be part of his legacy, adding that he did not need the money that could come
of such a plan. (He says, in fact, that his estate will go to charity.) His
motivation, Pickens said, was to “elevate the debate” given that the presidential
candidates “do not have much of an energy plan for the short term, and the
short term has to be addressed.”
“Obviously this isn’t a solution for the long term, because it shifts our dependence
from one depleting hydrocarbon resource to another,” said Toby Shute of the
Motley Fool investment site. “But as a bridge to more sustainable arrangements,
the idea holds some appeal.” In interviews, Pickens has agreed with this stance.
“If you don’t solve the energy problem, it’s going to break us before we even
get to solving health care and some of these other important issues,” he says.
And the country’s energy policy must be approached, as USA Today’s Dan Reed
put it, with “the same sense of urgency that President Eisenhower had when
he pushed the rapid development of the interstate highway system during the
Cold War.”
The media-saturated announcement quickly gained the staunch Republican some
powerful Democratic friends. As the Washington Post reported, Senate Majority
Leader Harry M. Reid (D-Nev.) called Pickens “my political friend,” the head
of the Sierra Club hitched a ride in the oilman’s private jet, and House Speaker
Pelosi invited Pickens to speak to a Democratic caucus.
And as for his Republican allies? “This isn’t the ad campaign some GOP operatives
wanted Pickens to underwrite,” noted Steven Mufson of Washingtonpost.com. “Republicans
were counting on him to play a central role in the presidential campaign, hoping
he would pour millions of dollars into ads attacking Democratic candidate Sen.
Barack Obama.” (Such a move, of course, would be reminiscent of Pickens’ efforts
during the 2004 race, when he bankrolled the “Swift Boat” ads that helped harpoon
the campaign of Sen. John Kerry [D-Mass.].)
Pickens’ Pitch
On his Web site, PickensPlan.com, Pickens contributes regularly
updated videos chronicling the progress on his energy proposal. He has spoken
of his meetings with the heads of Google and Cisco, as well as a one-on-one
with fellow billionaire Warren Buffett. As of August 2, he said his site had
garnered 3 million hits, with some 200,000 people signed up to “march with
me.”
Pickens would like every engaged American to gather five friends to sign up
for the Pickens Plan. His goal, as he puts it, is to mobilize “an army” of
support for wind/natural gas and break the political stalemate that Pickens
says characterizes a lack of leadership in Washington.
Pickens’ army may be off to a good start. At his town hall meeting in Topeka,
Kansas, this summer, Pickens drew 500 people crammed into the meeting hall,
with another 400 outside listening on loudspeakers – in 103-degree heat – and
aligned himself with the state’s governor, Kathleen Sebelius, a longtime advocate
of alternative energy sources.
Will It Work?
The Pickens Plan lists a variety of advantages: a reduction
of our dependence on foreign oil, the cleaner-burning potential of natural
gas in cars, a revival for rural America based on wind turbines, numerous high-tech
jobs for a struggling economy and a savings to the nation of $300 billion per
year. Still, these best-case scenarios exist only as projections.
Will the Pickens Plan work? To answer that, we need to subdivide the question
into more specific queries:
Do we have the wind? Yes, according to Pickens, who has called the United States
“the Saudi Arabia of wind power.” Air currents coursing through the midsection
of the country reach the highest wind speed in the nation at a brisk eight
meters per second. Conversely, the most sluggish wind in the country is based
in the Gulf of Mexico area. “We have more wind than anyone else, and we’re
not using it,” said Pickens. “It’s a huge resource located perfectly in the
center of this country,” with the accompanying grid easily positioning electricity
both east and west.
Pickens pointed to Sweetwater, Texas, as his model, describing it as a community
transformed from a failure into a boomtown thanks to its turbines, which generate
2,000 megawatts of electricity. His plan for his hometown of Pampa, Texas,
would engender producing twice the power of Sweetwater, about 4,000 megawatts
(the equivalent combined output of four large coal-fired plants) at a cost
of about $10 billion, built by his own Mesa Power as the lead investor.
Not everyone agrees that wind is an abundant and reliable large-scale fuel
source, however. Scientist Eric Rosenbloom, who runs the National Wind Watch
Web site, greeted the Pickens Plan with skepticism, asserting that the clouds
are too fickle to depend upon for consistent power supply. Rosenbloom told
the Associated Press that additional power plants would be needed to offset
the times when the wind is not as strong. “It would require increasing natural
gas on the grid rather than freeing it up,” Rosenbloom said. Wind, he concluded,
is “not going to free up natural gas for transportation. There is no way.”
Do we have the natural gas? According to Washington, yes. A study released
in July for the American Clean Skies Foundation by Chicago-based Navigant Consulting,
Inc., indicated that the nation sits on 2,247 trillion cubic feet of natural
gas reserves. “That would be a 118-year supply at 2007 production levels,”
noted the Associated Press. Chesapeake Energy Corp. CEO Aubrey McClendon was
reported as saying that technological progress has given producers the means
to retrieve natural gas from such unconventional sources as shale, tight sands
and coal-bed methane.
The production of natural gas, however, has fallen from its peak in 1973. That
year U.S. wells produced more than 22 trillion cubic feet of natural gas. Production
fell off rapidly in the late 1970s and reached a low of 16 trillion cubic feet
in 1986. Soon afterward, the price of natural gas began to fall, to the point
of being halved in four years. This low price, noted a report published by
Environmental Science Activities for the 21st Century, “helped to spur increased
demand for the natural gas, which experienced a steady increase in production
throughout the 1990s. U.S. production has been leveling off in recent years,
with the increase in demand being met by importing natural gas from Canada
and a few other countries.”
Moreover, “we’d still have to import more than a third of our oil – assuming
everything went according to plan – and would probably end up importing a greater
share of natural gas as well,” stated columnist David Lazarus of the Los Angeles
Times. “Our friends in Russia are the leading natural gas purveyors, accounting
for almost 15 percent of world exports.”
Do we have the manpower? In addition to creating new construction and maintenance
jobs, notes the Pickens Plan Web site, “thousands of Americans will be employed
to manufacture the turbines and blades. These are high-skill jobs that pay
on a scale comparable to aerospace jobs.”
The dearth of talent in the hydrocarbon industry has been well documented in
the pages of World Energy Magazine and other sources. In an energy industry
where the average age is 48, and with a reputation that tends to turn away
the best and the brightest of the next generation, will a sector like wind
draw the needed professionals to carry out the strategic plan?
Do we have the money? Who is ultimately going to foot the bill for the billions
and even trillions of investment dollars it would take to essentially revise
the country’s power infrastructure? In California, Los Angeles Times writer
Anthony Rubenstein offered his answer. “Along with being the country’s biggest
wind power developer,” wrote Rubenstein, Pickens owns a company that is the
“sole backer of the stealthy Proposition 10 on California’s November ballot.
This measure would authorize the sale of $5 billion in general fund bonds to
provide alternative energy rebates and incentives – but by the time the principal
and the interest is paid off, it would squander at least $9.8 billion in taxpayer
money on Pickens’ self-serving natural gas agenda.”
“I’ve met Pickens,” Rubenstein added, “and I’ll vouch for his patriotic intentions
to get the U.S. off of foreign oil – but not for funding his interests on the
sly with billions of dollars from California’s taxpayers. In fact, I’d prefer
to believe that he’s being ill-served by his lawyers and political consultants,
because it’s clear that the shortcomings of Proposition 10 could ultimately
hurt his energy independence.”
The Houston Chronicle checked in with its assessment. “Pickens’ plan is bold,”
read the headline: “Too bad it won’t work.” Writer Loren Steffy elaborated:
“His plan follows his own businesses. His Mesa Power is pouring about $12 billion
into what would be the world’s largest wind farm near Pampa, Texas. He’s on
the board of the country’s biggest provider of natural gas for vehicles, and
his hedge fund company, BP Capital, with some $4 billion under management,
has bet heavily on natural gas producers.”
Depending on your view, said Steffy, “that either makes his plan self-serving
or shows he’s willing to put his money where his mouth is.” The writer concluded,
“I don’t begrudge Pickens his profits. He’s a successful businessman, and if
he gets richer from solving America’s energy problems, so be it.”
Do we have the vehicles? Key to the Pickens Plan is the eventual transition
to natural gas vehicles (NGV). Of course, a nation destined to run its cars
on natural gas would require a fleet of such vehicles, preferably loaded with
the performance and power and size that Americans prefer. Some NGVs, like the
Honda Civic GX, are already in production. According to NGVAmerica, of the
7 million natural gas vehicles in use worldwide, however, only 150,000 are
in the United States.
The Union of Concerned Scientists gave an overview of how a transition to NGVs
may take place: “Increased use of natural gas for transportation applications
will require infrastructure investments, laying the groundwork for the future
introduction of fuel cell vehicles,” the organization noted on its Web site.
“Experience with gaseous fuels and infrastructure can facilitate a transition
to a future hydrogen transportation system. In addition, demonstration projects
are proceeding that use a blend of hydrogen and natural gas in transit buses,
both reducing smog forming pollutants and introducing hydrogen as a transportation
fuel.”
Do we have a good reason? Finally, do we have an adequate reason to make this
dramatic change in our energy infrastructure? Speaking up in favor of more
traditional fuel sources was Paul Driessen of the Post Chronicle:
Hydrocarbon fuels built modern America, gave us the technologies and living
standards we enjoy today, helped us eradicate diseases that plagued earlier
generations, and boosted U.S. life expectancy from 50 in 1900 to nearly 80
today. They still provide 85 percent of our total energy, and we could greatly
reduce our reliance on oil imports if we would simply end the outrageous policies
that keep our nation’s abundant energy resources locked up.
We have enough oil, natural gas, oil shale, coal and uranium to provide power
for centuries. We have a growing consensus that we need to drill, onshore and
off. But partisan intransigence and ridiculous environmental claims prevent
us from utilizing these American resources.
The Gore Factor
Pickens got a lot of publicity for his money – headlines, television coverage
and an audience on Capitol Hill. So did former Vice President Al Gore last
year, albeit to much less controversy. Can that be because Gore stood squarely
on the Democratic side while Pickens is a staunch Republican?
For his part, Pickens has put polite distance between his proposal and Gore’s
Inconvenient Truth. “Today, former Vice President Al Gore put forward a framework
of a plan that is focused on global warming and climate issues,” Pickens said
in a statement released on July 17. “My plan is aimed squarely at breaking
the stranglehold that foreign oil has on our country and the $700 billion annual
impact it has on our economy. We import 70 percent of our oil and that number
is growing larger every year. Vice President Gore’s plan does not address this
enormous problem; it is clear that he and I have two different objectives,
and our plans should be viewed with that in mind.”
As for the candidates themselves, both John McCain and Barack Obama surfaced
with their spins on the suddenly hot commodity, T. Boone Pickens.
-
Obama claimed in early August that his energy policy had won the support
of Pickens: “T. Boone Pickens is about as conservative a guy as there is,”
the senator told a town hall group in Berea, Ohio. “That’s a serious Republican.
Oil man. Driller. He says we can’t drill our way out of the problem. I think
he knows more about it than John McCain.”
- McCain, whose advocacy of drilling contradicts Pickens’ wind plan, issued
no specific statement on the Pickens Plan as of early August, saying instead:
“All of these alternate forms of energy have to be, one, funded in pure
research and development, and second, see which one wins. … But let them
loose, unleash them all.”
While the hype and the debate over the Pickens Plan continue, consider how
such developments are viewed outside our borders. From the Business Times Singapore
came this observation from G. Panicker: “So few Americans are hopeful about
energy prices. A New York Times and CBS News poll, which listed the economy
as the top voter concern, says that people do not expect that ‘either candidate
is particularly likely to do much about the cost of gasoline prices.’ So, in
a uniquely American twist, it has fallen on a private individual – Mr. Pickens,
a geologist by training – to provide the leadership and make the future president
realise there is a real problem that needs to be addressed.”
Pickens’ leave-behind statement to the New York Times was one he said he got
from his father: “‘Son, a fool with a plan can beat a genius with no plan.’
I’m the only one with a plan. Nobody else has a plan.”
What’s in It for the Pushers?
It seems that if an innovator owns a business related to the solution he is
pushing, his motives are automatically suspect. If this logic holds true,
the country should have a problem anointing Gore its environmental protector,
since he, like Pickens, has a vested interest in saving the planet. In Gore’s
case, the interest includes his carbon-credit firm, which means Gore’s plan
for cap and trade will openly line his pockets with gold. And of course,
anyone who does not like his plan must be a global warming denier.
Those who want to fault Pickens need to be fair and acknowledge that Gore and
the environmental movement have as much to gain from their plan as Pickens
has to gain from his. Those who want to give him the “atta boy” need to be
clear that market forces are driving this, and it will be very good for him
and for his companies if this plan moves forward.
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