Spend any time in West Texas, and you’ll get used to leaning into the wind. So persistent is the wind that a legend has it that it stopped blowing once for half a minute and all the chickens fell over between Amarillo and San Angelo. If the locals could take wind and barrel it up like they do oil, or pipe it around like they do gas, they’d be living like sultans in the Saudi Arabia of wind. But they can’t. And somebody needs to explain that to T. Boone Pickens.
Mr. Pickens is trying to sell Congress something called the Pickens Plan, a madcap, Rube Goldberg political contraption designed to appeal to the worst elements of American politics — corporate self-dealing, xenophobia, economic illiteracy — while directing billions of dollars of subsidies into businesses in which Mr. Pickens has a financial interest. The plan goes like this: T. Boone Pickens and associates build some enormous wind farms on the Great Plains, which will produce a great deal of electricity. Unfortunately, the Great Plains are sparsely populated, and the current infrastructure for transmitting electricity would not support the efficient transmission of power from Mr. Pickens’s wind farms to the country’s population centers. So, somebody has to build a new system, and somebody has to pay for it: Mr. Pickens is nominating the American taxpayer to play that role.
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But wind power is just the beginning of it. Mr. Pickens wants to create that new wind power so that he can divert a great deal of the natural gas currently feeding the nation’s electric-power plants into the transportation market, specifically into the tractor-trailer rigs that haul food and freight and much else around the nation. Mr. Pickens is deeply invested in the natural-gas business and is the majority shareholder in the leading supplier of compressed natural gas (CNG) vehicle fuel. Unfortunately for him, the nation’s freight carriers have shown very little interest in converting their 18-wheelers into vehicles powered by compressed natural gas. The reason for this is that CNG conversion is expensive and inconvenient. And because there aren’t many trucks running on natural gas, there are not a lot of gas stations and such set up to fill up CNG vehicles. You can see how this would inconvenience Mr. Pickens and his colleagues.
Since the people who buy 18-wheelers haven’t shown much interest in buying CNG-powered versions, the Pickens Plan would help them to see the light, with a combination of mandates and bribery. (The original version of the NAT GAS Act, the Pickens Plan’s enabling legislation, contained a mandate that a certain proportion of new trucks be CNG-powered. That provision has been dropped, but an industry mandate, or the threat of such a mandate, remains as essential to the Pickens Plan as the individual mandate is to Obamacare.) Converting to CNG is expensive — the tax credits would run up to $64,000 per truck, with about 8 million or so trucks operating in the country, and $100,000 per filling station to retrofit. Mr. Pickens proposes to offset that pain by offering a bunch of subsidies for the people who would be obliged to endure it. Somebody has to pay for those, too, and Mr. Pickens again nominates the American taxpayer.
This is buffoonery — buffoonery to which both Barack Obama and John Boehner, along with about 150 members of Congress, have pledged their support.
Mr. Pickens is on a jihad against “foreign oil.” He believes that the United States should consume less oil produced in the places where it is most efficient to produce it. Ask him why and he’ll sputter about Arabs and Chinese — I’ve asked, I’ve seen the sputtering. The economic philosophy holding that a country should produce what it consumes and consume what it produces, minimizing its trade with nefarious foreigners and their wicked, efficiently produced goods and services, is called “autarky.” Autarky is not really how you want to live: On the individual level autarky means the life of Robinson Crusoe, and on the national level autarky means the life of North Korea. The intermediate grades of autarky are hardly more attractive. It is difficult to imagine why we would not want to consume goods produced in the places they are best produced. Nobody in Maine expects to eat locally grown mangos, and you don’t go to Lubbock, Texas, for the fresh seafood. If you live in Kansas, you probably drink wine made by the invidious French rather than by the good plainsmen of Eureka, decent and God-fearing though they may be. Italians want their televisions made by Sony. Indians will drive Indian cars until they can afford German ones. And thus the world goes ’round.
Excellent article, Kevin. T. Boone can dress this pig up with beautiful clothes, bathe and make it smell good, and put lipstick on it, but it's still a pig-in-a-poke. I'm sure he's proposing this plan because he's concerned more about the US's future more than his own. I'll believe that when the pig flies.
Kevin you are spot on. I remember watching Pickens a few years ago when he started his campaign for wind farms and NG. It wasn't 3 minutes into the interview that he was saying that we should all pay for the infrastructure so he and his buddies can make a lot of money. He blasts ethanol and other subsidies then turns around to say that he needs us to prop up everything he's doing. I'd like to see how much gov't money he's gotten over the years from his oil businesses. He's a billionaire huckster who wants others to fund his business and fill his own pockets. He'd be more at home in Russia. NR and others should stop giving him the platform to promote his self serving ideas. Thanks.
Thank you Kevin! Facts like this to counter the many lies out there are one of the main reasons I go to places like NR.
If windmills and natural gas trucks are such wonderful and efficient means of energy production and consumption, then I am positive that the market will bring them along without having to steal any money from the taxpayers:)
Mr. Pickens and I share an alma mater (well, perhaps he shares a tiny, insignificant morsel with me), and if we're ever going to get the athletic village completed, it's absolutely vital that his hedge fund and other business endeavors perform well.
In all seriousness, this article is right on, and I lost a great deal of respect for Mr. Pickens while watching his shameless, at-all-costs plugging of this plan. This is high-dollar rent seeking at its finest.
When you get to the Wall Street angle you begin to understand why 150 congressional dunderheads (including Boehner) bought in. Their staffers are seeking the proverbial Capitol Hill pot of gold - a job with Goldman Sachs, Citibank, you name it. They can't hack business school, or understand economics but, if they can get the boss and couple of other guys to vote for this Wall Street'll toss them a sinecure.
Of course, Pickens is no less contemptible. Rather than really consider how to surmount the distribution and conversion problem he'll just get the feds to mandate it. What an entrepreneur!
In light of what the people of Texas and the Southwest US went through during the coldest weeks of last winter (rolling blackouts and brownouts) it is fair to say what Texas needs is not more wind farms or NG, but coal fired electical plants. The Texas legislature voted down a proposal to build 8 new power plants in 2005 in order to "protect the enviorment". The electricity form these plants was suppose to provide electricity to the NG pumping stations during peak hours. Without these fossil fuel powered electrical stations there is no way that the utilities can keep up with demand when the temperature falls below 0 or above 110. We all saw this when Dallas and surrounding areas had rolling blackouts last January.
T-Boone Pickens is whistling dixie. And our society is playing with fire. Let us hope we do not have a really severe winter in coming years, as what happened in Dallas could happen in a town near you. Perhaps then we will finally get serious about energy production.
No, whatever foolishness may have been committed by T Boone, referencing last winter's power shortages in Texas in this context is a complete red herring. Those shortages came about from the rare freezing temperatures impacting (unprepared) traditional heat cycle plants that heat and evaporate water to make electricity. In this case the wind turbines just kept spinning.
At least Immelt doesn't look like he's begging for a handout. T-Bo, you've lost your edge. To Fil-Tx - he's not even trying to dress this pig up! Boone just stopped by the feedlot and grabbed the biggest sow he could find, threw it in the back of his pickup and headed to DC on this one.
The Pickens scam sounds much like the one instituted by our local school district 25 years ago. The superintendent back then was big buds with some CNG types and sold the district on CNG buses. The bus fleet was converted at great expense, but the maintainance cost increased while performance and fuel efficiency tanked. The super and his buds made out, however.
The CNG bus fleet was disbanded in favor of more efficient and less troublesome diesel engine models.
I don't know if I like the Pickens Plan, but I definitely don't like the Williamson Plan, which is to purchase as much oil as possible from the Middle East and hope for the best.
And how is it "xenopobic" to say "The Chinese have an energy plan and we don't"? Answer: It's not. Mr. Williamson just wants to go on his usual rant about socialist police states, wherein American public schools are akin to Cambodian re-education camps.
1) We don't buy much oil from the middle east.
2) What's wrong with buying any product from the cheapest producer.
3) American public schools have much in common with communist indoctrination.
Kevin, another good article, I hope some of it sinks in to the "skeptical, probing, MSM" so when Pickens shows up with his elixirs, he can be called on the carpet. With regard to energy independence, it is nothing more than a political slogan as you know, however it would be nice to lift the self imposed "tariffs" we have on our own oil production, and maybe an analysis of the cost of keeping shipping lanes open in the middle east, friendly dictators in certain countries in power, obligations to allies to invade countries that don't supply us oil and other ancillary costs of oil that doesn't necessarily show up at the pump. Maybe, just maybe, massively increasing our own production isn't as expensive as some might think.
The Middle East sits on "petro-dollars" whether we like it or not, whether we buy that oil or not. If we consume our own energy, it doesn't change significantly the value of Middle East oil on the world market. If we don't go with the "cheapest" energy, the only harm we do is let other nations consume that cheaper energy and take advantage of a competitive economic advantage. Why would we increase our energy costs on purpose when we simply cannot change the fact the Middle East can and will sell their oil to the rest of the world, it's a unchangeable fact.
You may have missed the point warren, one big reason the middle east is a cheaper source of oil is our fricking military keeps it flowing. We all understand that oil is a world wide commodity and prices are not set regionally, however costs are regionally incurred. We can't domestically produce enough oil to support our use, however we don't need to set all kinds of ridiculous regulations that only result in much higher domestic production costs and loss of jobs. How many jobs are being lost in the gulf and in alaska due to regulations from DC? Yea I guess next you'll say that an increase in supply, or even a perception of an increase in supply won't change the price paid at the pump.
You may have missed the point warren, one big reason the middle east is a cheaper source of oil is our fricking military keeps it flowing. We all understand that oil is a world wide commodity and prices are not set regionally, however costs are regionally incurred. We can't domestically produce enough oil to support our use, however we don't need to set all kinds of ridiculous regulations that only result in much higher domestic production costs and loss of jobs. How many jobs are being lost and how much less in royalty and lease payments are being made in the gulf and in alaska and off the west coast and in (fill in the blank) due to regulations from DC? Yea I guess next you'll say that an increase in supply, or even a perception of an increase in supply won't change the price paid at the pump.
I'm from West Texas, Pampa, to be specific, the once and future home of Mr. Picken's Wonderful World of Wind Power. He's a lying, totally self-interested, unscrupulous b*stard and to pass on a little West Texas wisdom ... I wouldn't trust him as far as I could throw him.
Mr. Pickens is only one, though perhaps the most candid, of thousands of rent seekers trying to insert their snouts into the troughs that are our governments.
They are not the problem, though they are a loathsome porcine herd. The politicians and bureaucrats who slop our money into those troughs are the problem.
We do need to know more about every one of them and their schemes, though. Thanks, Kevin.
I still see no reason not to use the same technology that Sasol uses to make gasoline from coal. They're making 100,000 barrels a day. Its how South Africa got around the oil embargo during the Apartheid era. We can make that oil here and use our garbage for energy just like Denmark & China.
