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Philanthropy

T Boone Pickens on energy and politics

T Boone Pickens (Time Magazine cover, March 4th, 1985)

The full text of our exclusive interview with T Boone Pickens appears in the Spring 2012 edition of B Beyond magazine, along with pictures taken at the Pickens’ Mesa Vista ranch.

BB. The Pickens Plan makes two overwhelming arguments – one is global and has to do with sustainable energy; the other is US-specific and makes the case for liberating the country from OPEC oil-dependency, among other things. Why then, in your opinion, has the Pickens Plan been facing resistance from legislators?

TB. I do in fact have a lot of support for it but it’s generally very hard to get something to the Senate floor and get it voted in. The plan is not complicated and we have an extensive paper on it. Now that the Natural Gas Act has been introduced, this will hopefully set the country in the right direction of making better use of its own energy resources. I do believe that if the Act doesn’t pass through Senate this year (2011), it will pass next year.

BB Have you been promoting the plan for a good long time now?

TB. I started it in July of ’08.

BB We think the plan ought to have been adopted sooner

TB. It should have – but things in Washington happen very slowly.

BB. As indeed everywhere else, yes. Are there any other practical barriers, never mind legislative barriers, to implementing the Pickens Plan, such as the expense of converting the grid or converting vehicles from using oil to natural gas consumption?

TB. The Natural Gas Act didn’t have anything to do with the grid – it referred to using natural gas for heavy duty trucks.

Below is a model for what you could save on transportation fuel.

70% of all the oil produced in the world every day goes for transportation fuel and if you want to reduce the imports of OPEC oil, you have to start with transportation. I have focused on that because natural gas is so cheap. Unfortunately, with natural gas prices so low, it has made wind energy uneconomical. But if you look at the cost of each one of the fuels on a megawatt hour, the most expensive is solar at $200 megawatt hour while biomass is $140, nuclear is $125, geothermal is $99, wind is $80, coal is $73 and natural gas is $62. Natural gas is therefore the most economical energy source, so long as you have a lot of it and the price remains constant. If and when natural gas prices go up to $6, then you can get serious about wind energy projects.

The Pickens Plan demonstrates that we can cut OPEC oil imports by half over 5 years. You don’t need a special government department to implement or administer it, which makes it an even more attractive proposition.

BB. But would the vehicles have to be converted from oil to natural gas consumption?

TB. What you do is, as you buy new vehicles you just replace them with the natural gas engine.

BB Would that be very costly?

TB The consumer will get a tax credit of around $20,000 to $30,000 and that tax credit will be covered by a user tax on the fuel. Once you get to that point, the price of a natural gas engine will go down and become very competitive with diesel. Let me give you an example with trash trucks in the United States. Half the trash trucks next year will be on natural gas – while incremental difference between diesel and natural gas trash trucks was about $50,000 five years ago, it’s now $10,000.

BB. You certainly know your figures.

TB. Well, I have been at it for so long. I have been in the business since I got out of school in 1951, so 60 years now.

BB The energy crisis is not just US specific – the entire world faces some kind of an energy crisis.

TB Energy is confusing to most people and in America in particular people do not understand the energy available to us. I am sitting here today looking at the screen: natural gas is selling for $3.59 while the Mid-East price is between $16 and $18, because it’s indexed to oil, and in London it’s $13. So here we are, we have the cheapest energy in the world in this country which is incredible. We have more natural gas than any other country in the world – more than Russia or Iran, but the missing link in America is leadership. The leadership does not understand energy and how we can move industry back in here and create more jobs. We can clearly show them that if they pass this bill you can create jobs for $10,000 a piece which is unheard of but, you know, they don’t pay attention to it. They hear what you say but they don’t listen.

BB. Why do you think that is, I mean is it just the present government or politicians in general?

TB Well, we couldn’t get the Bush government to do anything either. The chemical industry is against the energy plan because they want very cheap natural gas, which gives them huge profit margins. They are making more money than they have ever made in history and they have done it off of cheap natural gas. But you also have major oil companies that are against the energy plan. For instance 80% of Exxon’s revenues come from foreign oil. They import a lot of OPEC oil and refine it and sell it of course for gasoline and diesel in this country. So we are up against many vested interests which work hard for their shareholders – that’s the capitalistic system.

But I’m working hard for America. My goal is to get an energy plan for America. We are the only country in the world that has no energy plan yet we use 20 million barrels of oil a day. The world produces 90 million barrels of oil a day and the closest consumer to us is China – the Chinese use 10 million barrels a day. So they use half what we do, but they do have an energy plan: the Wall Street Journal said six months ago that the United States has not bought Boone Pickens’ energy plan but the Chinese have.

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