$2 Gas Doesn’t Mean Problem Solved

America Loses if Pickens Takes a Powder

Just over a week ago, T. Boone Pickens acknowledged on Meet the Press that the sluggish economy and lower oil prices have conspired to thwart his plans to fully fund what’s become known as the Pickens Plan.

BROKAW: Well, let me talk about what you have been talking about on television and everywhere else these days, which is converting to wind-driven general — generation of electricity and transferring natural gas to big public transportation.

I am told that, given the perilous state of the economy, the decline in oil prices, which has not made it as urgent in the minds of a lot of consumers, that you find yourself now at a very difficult crossroads financially in your own situation, and you’ve had to call a halt to your development plans.

PICKENS: Well, the wind, you know, it — I’ve got a — I had planned on 30 percent equity, 70 percent debt, and I can’t get any, any, any money for that at this point. But it doesn’t mean that’s the end of it. It’s been postponed is all it is. …

This is a shame on many levels.  U.S. oil production peaked in December 1970, some say in 1971.  Today we import over 70% of our oil.  Much of that comes from the friendly environs of Canada and Mexico, but a good bit of it comes from Saudi Arabia and other Middle Eastern nations.  As our dependence on foreign oil has grown since the 1970s, so has the flight of dollars used to buy that oil.  According to Pickens’ numbers – which no one disputes – Americans spend $700 billion every year on foreign oil. 

What does $700 billion mean?  Well, we all know how bad the U.S. economy is at the present time and it’s expected to worsen.  Congress just approved $700 billion to bailout the U.S. financial sector and it’s had barely an effect on the credit markets.  $700 billion is about 10% of the entire annual economy in the U.S.  What if those dollars were being put to use here at home – especially now.

But it’s not just about energy security and getting away from foreign oil for the sake of not being dependent.  Oil is a diminishing resource.  It’s non-renewable.  There hasn’t been a major new discovery of oil since the late 1960s.  The Middle East contains over half of the world’s proven reserves.  The problem with reserves is that in countries like Saudi Arabia and other OPEC nations, their production quotas are based on their stated reserves.  In order to produce more, thereby increasing revenue, these countries have restated their reserves to be higher year after year.  There is no transparency as there is here in the U.S., so we only have an educated guess as to what those reserves really are.  To make a long story short, they can’t be what they say they are – the rest of the world is reaching or has reached “Peak Oil” and every indication save OPEC official pronouncements says that the Middle East is not far behind.  Unless there is transparency, we won’t know what the score is until it’s too late.

So, oil is a matter of security.  Too much American wealth is being transferred to foreign countries to fuel our addiction.  The world is approaching peak oil production which will lead to less supply even as economies like those of China and India add to demand.  Tighter supplies and stronger demand mean higher prices that will eventually have nowhere to go but up.

Pickens, an oil man, understands all of this.  His plan is relatively simple.  Replace the portion of U.S. electrical power generation accounted for by natural gas (it’s 20% of the total) with wind energy.  The wind energy will come from a 4,000 Mw wind farm he plans to build in Pampa, Texas.  The natural gas which is not being used for electrical generation will be repurposed for transportation use – cars and trucks.  This would replace 38% – or $300 billion worth – of imported oil.  If this all sounds confusing visit Pickens’s site and watch the video, Whiteboard Presentation.  (Or watch the embedded video at the end of this post)

As someone who has read about the peak oil debate, considered the national security implications of our dependence on foreign oil and who wants the U.S. to be ready for the next energy economy – and better yet – leading it – I’ve learned this about energy policy:  There is no post-oil solution anywhere near ready to go.

We need a bridge to the future.  This energy bridge will be built on coal, solar, wind, nuclear, biomass and oil.  While we build this bridge there will have to be concurrent investment in research to determine what will take the place for oil as an energy source.  There is not a politician or business person in the United States who has put together the business plan and put their own money for building the bridge.  That is, except for T. Boone Pickens.

Give this some thought and consider signing up at the Pickens Plan website.  Sure, T. Boone could make some money off of his wind farm, but aren’t we constantly pontificating in this country about private sector solutions?  Pickens will need the support of Congress and President Obama to get this thing done and pull other industries and constituencies onboard. 

Don’t be fooled by $2 per gallon gasoline.  The economy slowed way down fairly quickly and demand went with it.  Four dollar gas was a foretaste of what’s to come and it won’t end at four bucks.  It’s more important than ever to show support for the Pickens Plan so that the politicians in Washington know we aren’t lulled to sleep by the calm in the storm. 

As an Obama supporter, beginning this bridge to our energy future is change I can believe in.  I hope you’ll join me and others by signing up to show your support.