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Boone Pickens energy plan gains some traction

August 18th, 2008 · 1 Comment

We reported on the T Boone Pickens plan for energy before. He’s the legendary Texas oil man (who holds 3M shares in InterOil) and he’s so disgusted with US energy policy that he came up with his own plan, including a $58M budget to market it. It relies on alternatives (mostly wind energy) and natural gas.

From Bloomberg:

  • Democrat Barack Obama met with billionaire oilman T. Boone Pickens today and said the two will address how the country can look past political differences to unify around a comprehensive energy policy.
  • Pickens contributed $3 million to the Swift Boat Veterans for Truth, the group that challenged Democrat John Kerry’s war record in the 2004 presidential race.
  • “He’s got a lot longer track record than that,” Obama said when asked about Pickens’ involvement in tearing down Kerry’s war record. “He’s a legendary entrepreneur and one of the things that I think we have to unify the country around is having an intelligent energy policy.”
  • Pickens, the founder and chairman of Dallas-based BP Capital LLC, manages funds linked with both energy commodities and equities. He has said presidential candidates historically have failed to address the energy crisis. He discussed energy policy with Obama’s rival, Republican Senator John McCain of Arizona, last week in Aspen, Colorado.
  • Pickens, 80, unveiled a national energy plan last month that relies on domestically produced natural gas to cut U.S. dependence on foreign oil.

From Moneynews:

  • Texas energy tycoon T. Boone Pickens said his plan to cut U.S. oil use by converting cars to run on natural gas after boosting wind and solar power hasn’t suffered despite a 23 percent drop in crude prices since July.
  • “Why should it? You can’t change something in a matter of a few weeks,” Pickens said in a telephone interview. “We’re importing way too much oil, whether it’s $120 or $150 a barrel, it doesn’t make any difference.”
  • Pickens revealed the plan — which envisions spending billions on turbines and transmission lines to tap the country’s most blustery corridor from Texas to North Dakota — and launched an advertising campaign last month.
  • A massive move to wind power — and solar power in the Southwest — would divert natural gas from being burned for power and make it available to run vehicles, according to the plan. It also calls for more drilling of domestic oil.
  • Crude oil briefly fell below $113 a barrel on Thursday, after hitting over $147 on July 11, as high fuel prices dampened demand in the United States, the world’s thirstiest consumer of motor fuel. The U.S. Department of Transportation said this week vehicle travel declined for the eighth month in a row.
  • “All of those things help, and it’s good for the country for them to happen, but you still have to do something about your (oil) imports, which are still almost 70 percent,” said Pickens, who has met with governors from wind corridor states Oklahoma, Kansas and Montana in recent weeks.
  • Pickens said oil prices may drop even further, to $110, sometime in the next few weeks, but won’t dip below $100, and that the price will dog the United States for decades unless it adopts a plan and sticks to it. The United States dropped ambitious plans for solar and wind power after petroleum prices fell in the 1980s.
  • “In the past that’s what happened when the price went down, all the plans stopped,” he said.
  • The lifelong Republican hopes to make energy the top issue in the U.S. presidential campaign. He has not come out in favor of either candidate yet.
  • “(Barack Obama) doesn’t have any plan yet that would reduce the imports,” he said “Neither one of them do.”
  • He said he was surprised John McCain hasn’t yet suggested tapping the Arctic National Wildlife Refuge for crude despite his strident pleas for more domestic oil drilling now.

He should find some support from the following though:

  • Poll results can prove almost anything. Often, contradictory headlines announce the triumph of competing strategies over each other based on different aspects of the same poll. Some commentators, reading recent polls showing Americans to now favor oil drilling in protected offshore regions and in the Alaskan National Wildlife Refuge (ANWR), conclude the electorate is moving toward Republican energy policies.
  • It’s not that easy. While the poll results on drilling do suggest a move in the Republican direction, a wiser reading of the overall poll results was summarized by the Washington Post: “…majorities support all of the five potential federal initiatives tested…” Way more than any other measure, Americans want better fuel efficiency standards for their vehicles. Depending on how that’s evaluated, it either favors Democrats (for their meagre efforts to improve vehicle fuel standards) or discredits both parties (for not providing substantial standards).

This is what Paul Krugman had to say about drilling offshore:

  • What I mean, instead, is that know-nothingism — the insistence that there are simple, brute-force, instant-gratification answers to every problem, and that there’s something effeminate and weak about anyone who suggests otherwise — has become the core of Republican policy and political strategy. The party’s de facto slogan has become: “Real men don’t think things through.
  • What about the experts at the Department of Energy who say that it would take years before offshore drilling would yield any oil at all, and that even then the effect on prices at the pump would be “insignificant”? Presumably they’re just a bunch of wimps, probably Democrats
  • Sad to say, the current drill-and-burn campaign is getting some political traction. According to one recent poll, 69 percent of Americans now favor expanded offshore drilling — and 51 percent of them believe that removing restrictions on drilling would reduce gas prices within a year.

And Boone himself, what does he think about offshore drilling:

  • What about President Bush’s plan? Just last month he lifted the executive ban on drilling for oil in offshore areas. Yeah, but that’s not going to fix our problem.

The best piece comes from Thomas Friedman (NYT columnist and author of “The World is Flat”) though, it shows what a real energy policy could achieve:

  • Unlike America, Denmark, which was so badly hammered by the 1973 Arab oil embargo that it banned all Sunday driving for a while, responded to that crisis in such a sustained, focused and systematic way that today it is energy independent. In 1973, said Hedegaard, “we got 99 percent of our energy from the Middle East. Today it is zero.”

Boone Pickens is not terribly green, but he’s especially worried about the US dependence on imported oil (70%). He has probably read this Friedman article..

Read it too. Smart policies can make a huge difference over time..

Tags: The Markets

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