Wake Up Pickens – Natural Gas May Not Be Panacea

T. Boone Pickens’ energy plan for the U.S. has fatal flaws that challenge its real potential and the notion that natural gas is the panacea fuel for solving all the nation’s energy and environmental problems. Do not count on it as the long-term policy solution for energy independence or the fuel to depend on for your investment decisions. He may make another fortune but it is not necessarily in the best interests of the country, our economy, or our standard of living.

The Pickens Energy Plan

T. Boone Pickens has always liked to play the role of the bootstrap visionary: a man of big and audacious ideas, ideas that are so big and so audacious that they can sweep aside the myriad pragmatic objections such notions raise.

But as he learned in his elusive quest for Gulf Oil (and many other oil and gas companies) in the 1980s, conceptual purity and singular focus are usually not enough to overcome the messy details that ensnare such visions. The Pickens Plan for mass conversion of the U.S. transportation fleet to natural gas vehicles (NGVs) and for wind farms the size of New Jersey shares this trait.

The heart of the Pickens Plan is a call to replace all natural gas-fired power generation with wind power and to take the natural gas thus saved and put it into all new government vehicles, all fleet vehicles, all long-haul transport vehicles, etc., within a decade. Pickens has specified repeatedly that this must take place over the next 10 years or something very bad will happen. Therefore, the federal government must get on the ball and make it happen, quickly. Remember, this directive is coming from a man with large natural gas holdings and a project in progress to build 2,000 wind mills in the Texas Panhandle.

When this plan was first pitched in the spring and summer of 2008, it had several things going for it. Gasoline and diesel fuel prices were skyrocketing (Pickens helpfully projected $300/Bbl as a likely equilibrium price in television interviews), the global economy was unraveling, and the campaign rhetoric on global warming and energy independence was escalating in step with the oil-driven U.S. trade imbalance. The public did not know what to make of any of this, but the public was scared and angry.

The Pickens Plan, on the surface, appeared to address all of these frightening issues with a simple quid pro quo: wind mills for power, natural gas for transportation. Result: crude oil imports cut in half, carbon emissions reduced, problems solved. An unspecified amount of government money would lubricate the process in an unspecified manner. You could keep the whole plan in your head; describe it in a sound bite. The environmental lobby could live with the message and cable news reporters loved the oft-trumpeted irony of the messenger, a “legendary Texas oil man,” pushing wind mills. All that was needed was a little common sense and some willpower.