T. Boone Pickens admits he finds himself on a mission like no other in his more than 60-year business career.
And at 83-years old, the legendary oil man, landowner and business icon says he is in a bit of a hurry to get it done.
What’s at stake Pickens says is whether the United States will regain control of the world’s wealth and economic power, something that would “change the dynamics of the world,” he says.
At the heart of his mission is freeing the United States from its dependence on foreign oil, particularly oil controlled by OPEC, a weak spot that he believes is sapping the nation’s wealth and productivity. And he says that to rid the U.S. of foreign oil could be easier than people think.
He needs one major industry partner — the trucking industry — to get the nation halfway there. “We produce eight million barrels of oil a day here in the U.S. and we import 12 million barrels of oil a day of which five million comes from OPEC,” Boone explains.
“Trucking consumes half of the five million barrels we buy from OPEC each day,” he answers. So Pickens is meeting with business owners and executives, with the goal of convincing the trucking industry to convert its 8.5 million Class 6, 7 and 8 tractors from diesel fuel to natural gas.
From a business viewpoint, Pickens says it’s a no brainer. They will reap an immediate return on their investment since natural gas is at least $1.50 per gallon cheaper.
“I’ve talked to trucking guys,” Pickens says, “whose companies consume 100 million gallons of fuel a year and they see very quickly how they can save a dollar and a half a gallon. It doesn’t take but about a second for them to see that’s a hundred and fifty million dollars.”
That’s well and good but Pickens acknowledges one big hurdle is that natural gas vehicles (NGV) are more expensive than diesel trucks.
“Kevin Knight [chairman of Knight Transportation] told me one day, ‘Boone, I like this plan but don’t make us pay to be patriotic’ and I told him that’s why I’m working with President Obama to get a tax credit.”
And Pickens is persuasive.
After touring a Freightliner factory, President Obama announced in March that he will push Congress to approve tax credits equal to half of the added cost of alternatively powered commercial vehicles.
Freightliner officials said a Class 8 tractor powered by compressed natural gas (CNG) currently costs about $40,000 more than a similar diesel powered model. Pickens wants a dollar for dollar tax credit if he can get it.
FUEL STATIONS, OPPOSITION
There is an inherent weakness in Pickens’ plan — a lack of fuel stations across the country. So Pickens helped negotiate a deal between Clean Energy Fuels, of which he is a member of the board of directors, and Pilot Flying J Travel Plazas to install natural gas fueling stations on major interstate highway freight corridors.
Pickens has been selling his Pickens Plan since 2008 and has spent, according to some reports, as much as $100 million of his own money to promote and advertise its virtues. There is no question the plan is gathering momentum and supporters. But standing squarely in the way of getting the tax credits he needs to help trucking companies buy these natural gas trucks are a group of political and industry heavyweights — industries and people that, for various reasons, want to keep folks pumping $4.25 diesel fuel.
For example, Pickens points a finger at Grover Norquist, the influential manager of the anti-tax group Americans for Tax Reform. Norquist opposes Pickens and his plan to abandon OPEC.
Also, he says the Koch brothers, mega-wealthy financial supporters of the conservative group Americans for Prosperity, are also against him. Of course, the oil industry and all the money it can muster doesn’t want people using less diesel.
To counter these opponents, Pickens is forming a bipartisan (some would say unlikely) political coalition, starting with President Obama.
Senate Majority Leader Harry Reid, D-Nevada, and most Democratic senators, along with a core of influential Republicans like U.S. Sen. Saxby Chambliss, R-Ga., are with Pickens. So are environmental groups as such The Sierra Club, although it has misgivings about natural gas exploration. And, of course, the natural gas industry is with him and hopefully, the trucking industry will join the effort.
BENEFIT OF MORE GAS
The battle lines are forming. As Pickens sees it, America’s future could hang in the balance. And Congress will decide who wins.
At the heart of The Pickens Plan for America is converting from petroleum to natural gas — the same stuff we use to cook food in kitchens everywhere. He’s had gas wells a plenty over the years.
But the real find in natural gas now is the ability to extract it from places never thought possible.
“Now we are able to recover more gas from the source rock, like shale,” he says. “This geologist never believed you would be able to get natural gas out of that.
“You knew it was there because you could drill a well and have a gas sniffer on there and all the way through the shale it was bing—bing—bing until you just cut it off. I mean we were drilling gas but it was four percent porosity and looked like this table top under a microscope and didn’t have any permeability in it.
“But then we found out there were fractures in it that could be connected through hydraulic fracturing and of course, that is a big deal in Arkansas.
“We have more natural gas than any other country in the world,” he said emphatically.
Jay Rosser, his public affairs person at BP Capital, explained that The Pickens Plan “actually had two parts originally,” he explains. “It was renewable energy which is power generation and then the transportation side which removes our dependency on foreign oil.
“What people don’t realize,” Rosser continues, “is that if you really want to tackle the OPEC issue — and the national and economic security that goes with it — you have to go after the transportation industry. It is the only way you can do it. People always ask, ‘Boone, why don’t you go after the passenger vehicle?’ But it’s the trucks that are the big users.”
On wind energy, Pickens has this to say: “To get into this thing I decided I needed to go into renewables, which is wind,” he continued. “Most landowners like the royalties from those turbines. But then wind won’t work because wind power is priced off the margin and natural gas is at $2.50 so you can’t finance a wind deal until natural gas is $6.” So wind energy, while still an alternative to petroleum, is not now the highest priority. Natural gas is.”
Pickens isn’t shy about his past involvement in presidential campaigns, notably the 2004 election between President George Bush and U.S. Sen. John Kerry, D-Mass. He offers up that he had a big role in the outcome, having financed the controversial “Swift Boat” commercials that questioned Kerry’s military service and patriotism.
But he seems to have now backed away from actively engaging in politics, telling people he will remain on the sidelines to focus on promoting a bipartisan effort to convince Congress to make the United States energy independent.
Pickens says virtually every country in the world has an energy policy — except the United States. No president has succeeded in getting one through Congress — and Pickens says many presidents never even asked for an energy policy.
“I met with President Obama in Reno, Nevada. He wanted to know my views on energy and there were only three of us there and the president asked me if he could take notes which he did. David Axelrod was there with him and David and I have gotten to know each other really well. He’s a good guy.
“And President Obama asked ‘do I say anything about energy that makes you uncomfortable?’
“I said you say one thing that makes me laugh. He looked at me seriously and kind of leaned forward. It’s when you say you are going to have one million plug-in hybrids in 10 years. Obama said, ‘let me tell you something. Mr. Pickens, I’m going to do that’ and I said well, walk over there and look out that window on the parking lot. Now imagine one million cars out there. It would look like one hell of a lot of cars.
“The president said ‘it would be a lot of cars yes’ and I said well, we have 250 million vehicles in the U.S. and that million isn’t very many. The president smiled and relaxed and kind of laughed and said ‘no, that isn’t very many.’
“We laughed together and I said well that’s why I laugh when you say that, because one million plug-in hybrids won’t mean anything. I told him not many people in Washington understand energy. You can’t have a five minute conversation there with anyone because they run out of what they know before the five minutes is up.”
That meeting in Reno apparently led to an alliance of sorts between Pickens and Obama, at least on energy.
The administration has embraced much of Pickens’s plan to provide tax incentives, largely to the trucking industry, to help companies transition from diesel powered trucks to trucks powered by natural gas.
(The story to be posted Wednesday will focus more on the trucking industry’s role in moving toward natural gas.)