It's hard not to like T. Boone Pickens. At 80 years, he could have retired many times over from a multi-billion dollar career in the old and gas industry. But this is a man on a mission, and you could see the fire in his eyes when he got up close and personal during a press meeting this morning in Santa Barbara.
Pickens was put on the hot seat earlier this morning at the Wall Street Journal ECO:nomics summit
, answering questions and responding to a general sense of skepticism about the Pickens Plan (40% of attendees polled by digital hand-held devices were against the Plan). In case you are not familiar with the now famous Pickens plan it goes like this...
There currently is no comprehensive plan to wean ourselves form foreign oil. This is a very big problem. At any point, OPEC which now controls about 55% of our oil supply could chose to "flip the switch," forcing the U.S. to pay much higher prices. With rapidly diminishing oil supplies in the U.S. (Pickens endorses Peak Oil theory) our demand for foreign oil will surely rise, resulting in what Boone calls "the fastest transfer of wealth in history," a transfer from North America to the Middle East.
The transference will be further accelerated when Mexico, our 3rd largest source of oil, runs out (their demand is rising dramatically while their supply has dropped from 2.2 to 1.4
million in the last 5 years). And Canada's infusion of oil might be troubled by the increasingly controversial Alberta Tar Sands
. In the background we have the spectre of explosive demand for oil in China, India and South America.
There is a looming inevitability that belies the current $44 per oil barrel. Like the quiet before a storm, it's only a matter of time before we hit the violent crossroads of demand and supply.
Pickens has a solution, and it's called the Pickens Plan.
After spending $56 million marketing the plan, it is gaining traction. Over 1.5 million people have pledged their support online (a fact, according to Pickens, that has finally gained him real access in the political sphere) and just last week he presented the plan to Obama's energy team in Washington.
But Pickens has had major criticisms to overcome from both sides of the political spectrum. On the left the "greenies," as Pickens refers to them, have been reluctantly coming board, though hardly anyone has forgotten his machiavellian support of the anti-Kerry 'Swift Boat' campaign, his under-the-radar acquisition of surface water rights in Texas, or the divisive Prop 10
which he introduced on last year's California ballot.
On the right, Wall Street (and notably the Wall Street Journal
) has lambasted Pickens for violating the sacred tenets of the free market.
But Pickens has a response for both. He has deflected blows from the left by creating an alliance with Al Gore (who backs his plan) and by declaring to the dismay of his Texas oil friends, "I buy Global Warming." To his right-wing critics that say he is disrupting the free market, he retorts:
Free market? Who's kidding who? OPEC is not a free market. We’re in a game where we have no cards. If you’re in a game with no cards, get out of the game.
In 1990 the U.S. was importing 40% of its oil. The number has steadily climbed to 67%. With the current trajectory we will be at 75% in a few years, a tipping point which will threaten both our economic and national security. According to Pickens we are seeing early warning signs of an impending crisis. Just two weeks ago, Saudi Arabian oil futures traded higher than West Texas oil for the first time in history. As he repeated today, "We will see a $60 barrel of oil, before we see a $40 barrel... if you don't think you're gonna see a $200 barrel of oil, you're joking."
I believe Pickens is onto something in more ways than one. First off, his framing of the situation, while all but ignoring the rhetoric of global warming, still serves the cause by focusing on the more tangible threats of weakened national security and unpredictability in the oil market.
As has been proven time and again, while Americans largely believe global warming is a threat, few connect to the issue emotionally, and fewer still actually make lifestyle changes based on the perceived threat of climate change. While suddenly shifting gas prices and the idea of Middle Eastern countries theoretically owning the United States is something every American can relate and react to.
And the plan, as a stepping stone to a more sustainable economy based on renewable energy sources, makes a lot of sense. The key of the Pickens Plan is to focus on converting the trucking industry to natural gas. Trucking and shipping in the U.S. accounts for 70% of all oil consumption, and of the 6.6 million 18-wheelers currently in operation, about 340,000 are up for replacement.
If these trucks were replaced with LNG trucks, we could kick-start a natural gas infrastructure for vehicles. His proposed $80,000 per vehicle incentive would offset the additional costs for the trucking industry and result in a skeleton distribution network of 2,000 stations, creating 450,000 jobs, while reducing a vehicle's carbon emissions by 20% and pollutant emissions by 90%. And according to Pickens we have decades of untapped natural gas reserves. A gallon of LNG could sell for as low as $1.50.
Both Al Gore and T. Boone Pickens agree that natural gas is a temporary (and a partial solution). Electric technology might be great for passenger vehicles in the near future, but will likely not provide the power needed for an 18-wheeler. But as electric technology improves in the coming decades, it's possible that wind and other renewable energy sources could power our entire fleet.
In the meantime, natural gas is looking like a step in the right direction.