The Boone Pickens Plan
Pickens has a plan, and he’d like to share it with the nation. With a media blitz that began Tuesday, he’s begun to do just that. If you haven’t read, seen or heard Pickens recently, then you’ve been deliberately avoiding modern media or have been catching up on old reruns.
T. Who?
In a nutshell, he’s an energy guy, an oil man from way back, and right now he’s someone who is looking to the future and doesn’t like what he sees. (For a more in-depth picture, check out his Website or this article I wrote back in April.) He’s 80 years old, he’s ornery and he’s made and lost more money in the energy game than anyone else we can think of. So when he decides to spend millions of dollars on a personal media blitz, people - and importantly, the market - pay attention.
The highlights of his plan have been covered everywhere, but the best summary comes from his Wall Street Journal editorial on July 9. Here’s how he defines the problem:
- Crude oil imports have risen from 24% to almost 70% between 1973 and today.
- The U.S. has 4% of the world’s population, yet consumes almost 25% of the world’s oil.
- The world produces 85 million barrels of oil per day, yet the world demands 86 million barrels of oil per day.
- World oil production has fallen every year since 2005, even though oil prices have risen.
- Over the next 10 years, the U.S. will spend $10 trillion on foreign oil.
- Dependence on foreign oil is dangerous.
- U.S.’s dependence on foreign oil can be reduced by one-third in 10 years.
The Pickens Plan
Simply put, use wind power to replace the natural gas currently used for electrical generation. That natural gas would then be used as transportation fuel in natural-gas-powered vehicles. The result would be a reduction of foreign imports by 38%. That’s the whole, alluringly simple plan.
Mr. Pickens doesn’t tout this as a way to reduce energy prices or even as the final answer. It is more of a “bridge” to allow the nation to have more time to develop other options - solar, ethanol, fuel cells and batteries - and also kick in with conservation.
His editorial call to action continues on to say:
“I believe my plan can be accomplished within 10 years if this country takes decisive and bold steps immediately … It invests in the heartland, creating thousands of new jobs … It will be accomplished solely through private investment with no new consumer or corporate taxes or government regulation.
The future begins as soon as Congress and the president act. The government must mandate the formation of wind and solar transmission corridors, and renew the subsidies for economic and alternative energy development in areas where the wind and sun are abundant.”
The emphasis there is very much mine. The most incongruous part of the Pickens plan is right there in bold. He’s very clear that he wants to make this part of the presidential debate, because, he says:
“I am going to get this into the presidential debate,” Pickens said. “I am hoping this will be viewed very much like war.” (Bloomberg)
And yet he’s claiming that his plan will be both Libertarian friendly (zero tax impact, zero regulatory impact) and screaming-liberal friendly (government-mandated, -regulated and -subsidized.) If such a thing is even possible without medication for Multiple Personality Disorder, we should elect Pickens. But of course it’s not. Boone’s plan is carefully constructed to get as many people nodding their heads as possible.
Pickens is no stranger to presidential election politics. He was a large contributor to the Swift Boat Veterans for Truth campaign against John Kerry and even offered a $1 million prize to anyone who could disprove the Swift Boat Vets allegations (not because he was actually looking for proof - but to make the point against Kerry).
So Pickens has thrown down the gauntlet. Will the candidates respond directly? Probably not. Boone Pickens is not running for office - he can (and will) say anything he wants and put forth any and all ideas that he has. McCain and Obama are trying to get elected. Now is not the time for them to make grand, sweeping “We will go to the moon”-type statements or to look like their policies will be swayed by the ad campaign of an energy baron.
But they do need to talk about the issues at stake.
Just where do the candidates stand on energy? Sometimes it can be difficult to tell. Reuters has this factbox from June 4, 2008, that outlines where the candidates stand on certain issues. Obama has had an energy section on his Website for a while, and now with McCain’s announcement of his Lexington Project last month, we can see what the politicians are saying for themselves, instead of gleaning snippets from nightly sound bites.
Here’s the simplest breakdown I could find:
|
Issue |
McCain |
Obama |
|
Nuclear |
45 new plants by 2030. Plans for 100 more. | Should be explored as an energy option. |
|
Clean Coal |
$2 billion a year til 2024 for clean coal research, development & deployment. | Will significantly increase the resources devoted to the commercialization and deployment of low-carbon coal technologies. |
|
Fuel Efficiency Standards |
Enforce existing CAFE standards. | Increase Fuel Economy standards - doubling within 18 years. |
|
|
Clean Car Challenge: $5,000 tax credit to everyone who buys a zero-emission car. | |
|
|
Calls on automakers to make a more rapid switch to Flex Fuel Vehicles. | |
|
|
$300 million prize for the creation of magic car battery. | |
|
Alternative Energy |
Tax credits to encourage the market for alternative, low-carbon fuels such as wind, hydro and solar power. | Invest $150 billion over 10 years in clean energy (biofuel, low-emission coal plants, better electricity grid, plug-in hybrids) |
|
The Oil Problem |
“Strategic independence” by 2025 | Reduce oil consumption 35% by 2030. |
|
Drilling |
Lifting restriction on drilling of the Outer Continental shelf | Keep restrictions on offshore drilling. |
Honestly, at this point in the campaign, it’s largely motherhood and apple pie. Both candidates will continue to talk about reducing our dependence on foreign oil, alternative fuels in the flavor of the month, and energy and environment as top priorities. The hot buttons will be in a few very specific areas: drilling, nuclear power, CAFE standards. These are issues with entrenched support bases.
So, which candidate would Pickens give his hypothetical endorsement too? As a longtime vocal Republican, Pickens would most likely support McCain, but as Stephen Power writes in his Washington Wire blog, Pickens doesn’t support McCain’s energy plan. Mr. Pickens dismisses nuclear power (one of McCain’s big deals) because it will take forever, and he’s right. In fact, Chris Morrison goes so far in VentureBeat as to suggest that Pickens’ interest in reducing the U.S.’ reliance on foreign oil through wind and natural gas is in line with Obama’s support of alternative fuels. In interviews, Obama is quick point out quotes like this:
“Obama says wind power could provide up to half the nation’s electricity needs, but federal tax incentives must be extended to keep that development in the United States.” Argus Leader
The bottom line is that Pickens has an agenda and he’ll likely keep stirring the pot all the way until election day. And the reason has as much to do with Pickens’ pocketbook as it does with altruism.
The end of Pickens’ Journal editorial states, “Mr. Pickens is CEO of BP Capital.”
What it doesn’t say is that in 1997, Boone Pickens started Pickens Fuel Corp, which changed its name to Clean Energy Fuels in 2001. Mr. Pickens remains a director there. Clean Energy Fuels’ main business? It supplies vehicular natural gas to large customers in the U.S. More recently, Mr. Pickens has been building a large wind farm in Texas.
Let me be very clear: This isn’t a surprise “gotcha.” Mr. Pickens does not hide the fact that he has actively taken an interest in alternative fuels - far from it. In fact, if you watch the video on his Pickens Plan site, he talks about building the largest wind farm in the world, with 4,000 megawatt capacity. He’s all about putting his money where his mouth is. Still, it’s hard not to see this media blitz as not just lobbying, but marketing.
When asked about this Houston Chronicle article, Pickens says, “I’m 80 years old. I’m worth $4 billion. I don’t need to make any more money.”
It’s true. If I had $4 billion, I wouldn’t think I “needed” more money. But it is also true that Boone Pickens is a businessman, and even when doing something for the good of the country, businessmen think about shareholders. Clean Energy Fuels’ shareholders stand to benefit from his plans.
P.S.
Do Pickens and McCain use the same writers?
Pickens Plan Website: “Projected over the next 10 years the cost will be $10 trillion - it will be the greatest transfer of wealth in the history of mankind.”
McCain’s Website: “This is the largest transfer of wealth in the history of mankind.”
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There is a Public Forum for discussions about Pickens Energy Plan
http://www.pickensenergyplan.com
Cheers !