Pickens: Ready to run on domestic energy

by The City Wire staff ([email protected]) 99 views 

“I can’t wait for the trucking industry’s trailers to say ‘I’m running on domestic fuel—not foreign oil,” said T. Boone Pickens when asked what role the U.S. trucking industry will have in this plan. He said that trucking is the key to the whole thing and he is working a plan to make it virtually seamless for companies to convert.

Pickens is pushing “The Pickens Plan” to develop a U.S. energy plan that moves the country to energy independence.

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.

Foremost, he believes the time is right — that there is a distinct parallel between today’s situation and the one that trucking companies faced in the 1970s.

“You know when the trucking industry began to phase out from gasoline to diesel?” asks Pickens, pausing before answering his own question. “It was 1972. Gasoline prices were through the roof and by 1977 the trucking industry had simply cycled out of gasoline trucks to diesel trucks.

“There was only one reason why trucking execs did that — diesel was cheaper than gas. They didn’t sell their trucks. They simply cycled out of them and I believe that is exactly what we will see in trucking — companies cycling out of diesel to natural gas.”

Pickens observes that fuel prices are taking all the trucking industry’s profits away.

“And if you’re not making much money in business, nothing else matters,” he observes. “It’s kind of like my dad used to say when I would ask him if we could do something or go somewhere and he would answer ‘no’ and I’d ask why and he’d say ‘there are three reasons why we can’t do it and the first is we don’t have the money, so it doesn’t matter about the other two.’ So I stopped asking.

“With natural gas it’s cleaner,” he begins. “It’s domestic. But more than anything, it’s cheap. For that reason and that reason alone, it’s going to happen. I mean we have so much natural gas and we are going to see five dollar diesel before we’ll see three dollar natural gas.”

Pickens has met with several trucking company executives to sell his plan. He recently attended the national meeting of the Truckload Carriers Association where Robert Lowe, chairman of Prime Inc., interviewed him before several hundred executives on the merits and benefits of running trucks on natural gas.

“Now I’ve had some hard-nosed truckers in here and they’ll say ‘hell, Boone, natural gas trucks won’t blow your hat off much less give me the torque I need’ but when you start saying this is about America, and being patriotic and you go down the list, that this is something that you can do for America and to a man, they are on board,” he said.

“I cannot get anybody in trucking to sit down with me who will say, ‘Boone, this is a bad idea, pal, and let me explain to you why’ because if somebody did, and it was better for America than this one, well, I would throw in with them,” he said.

Two immediate barriers to Pickens’s plan are not having enough fueling stations or enough Class 8 natural gas trucks for the industry to purchase.

Clean Energy Fuels Corp. of which Pickens is chairman, and Pilot-Flying J Travel Centers announced earlier this year a plan to install 70 refueling stations in 33 states by the end of 2012.

All of the natural gas stations will be located along major freight corridors.

Coupled with the availability of natural gas are the engine manufacturers and original equipment truck manufacturers such as Cummins-Westport, Kenworth, Peterbilt, Navistar, Freightliner and Caterpillar all announcing plans for the production of Class-8 trucks and natural gas engines.

Navistar recently announced it will build a full line of Class-8 tractors powered by natural gas.

“One of the major obstacles in the customer transition to natural gas has been the lack of a gas-powered range of engines to meet the multiple requirements without compromise,” said Jim Hebe, Navistar vice president of North America sales operations.

Daniel Ustian, president and CEO of Navistar, said customers would want natural-gas-powered vehicles even without government subsidies because the return on investment with fuel-costmsavings offsetting higher vehicle costs will let the transition stand on its own.

Pickens says the deal with Navistar was natural.

“I went to Navistar a few weeks ago and had breakfast with Daniel Ustian in Chicago,” he explained, “and Jim Hebe was there and he is a big advocate for natural gas.

“After we got through talking about it they said they were very interested. Then, a week later, they formed a strategic partnership with Clean Energy Fuels and they were on their way,” says Pickens.

In fact, Navistar is building a broadrange of Class 6 through Class 8 CNG and LNG-powered trucks. In turn, Clean Energy will work with Navistar and its customers to provide truck lessees with fueling contracts whose fuel cost savings help to lower overall costs.

“Jerry Moyes (chairman of Swift Transportation) was in Chicago at the same time and he is going to buy 400 natural gas trucks,” he adds, “and I know that Peterbilt is big into natural gas engines already.”

“I made a deal with the guys in Washington that I would get out of politics,” he says, smiling, “that is if we keep this natural gas initiative moving forward on a non-partisan basis so I really don’t know who I’ll support (for  president).”

If he and Obama have reached a political truce, even a working partnership, Pickens is coy to say. But only a naïve political observer would say it’s only a coincidence that Obama proposed a new federal tax credit last month to encourage truck fleets to purchase vehicles powered by natural gas or electricity. The credit remains a high priority for the administration, despite a failed attempt to add it to the Senate transportation bill.

Pickens acknowledges that he and the Obama administration have their work cut out for them. The political battle lines are forming. And Pickens’s opponents are the same folks that you might think are most politically aligned with his beliefs.

“Grover Norquist is against me,” he says straightly. But Pickens says Norquist’s clout on this issue goes beyond his anti-tax group. “His biggest clients are the Saudis,” he says.

But it gets worse.

“The Koch brothers will be against me,” he continues, “because they have the greatest margins they’ve ever had in the fertilizer and chemical business.

Plus they import 60,000 barrels of OPEC crude every day and they are also one of the biggest recipients of ethanol subsidies. So converting the country to natural gas will hit all of their profit points. So they are putting a lot of money out there against me.”

Nevertheless, Pickens isn’t used to losing. And he certainly doesn’t want the biggest quest of his business career to be a failure. He believes more than anything that he has ‘right’ on his side.

“It comes as you get older,” he explains, “and I’m 83 so I’m closer to the end than I am the beginning but I look at this natural gas thing as divine intervention. I mean for this gas to show up at this critical point for our country and all that it can mean, well, the United States has a tremendous opportunity.”

“But do we have the leadership?” he rhetorically asks. “That’s been the missing link. Number one, politicians don’t seem to understand. Two, they won’t put anything in motion. And if we don’t put anything in motion, we will continue to rely on OPEC oil.”

To prove his point, Pickens experienced a political setback in late March. U.S. Senate Majority Leader Harry Reid, D-Nev., an unlikely ally with Pickens on his Pickens Plan introduced an amendment to the current transportation bill that would have, among other things, offered a dollar for dollar tax credit to trucking companies that converted from diesel fuel to natural gas.

The amendment garnered 51 votes, nine shy of the 60 required to reach cloture and consider the amendment.

Forty five Democrats but only six Republicans voted for the tax credit amendment. Analysts point to the reasons why the GOP Senators fell off the wagon.

Five conservative groups, including the Club for Growth and Americans for Prosperity, sent a letter to each U.S. Senator opposing the amendment on free market and fiscal conservatism grounds, just as Pickens had predicted they would do in the Arkansas Trucking Association interview three weeks before.

But Pickens thinks it’s time Washington politicians stopped catering to lobbyists and foreign oil interests. He has put his stake on the U.S. trucking industry to help make his plan work, an industry not often known for leading dramatic political changes.

If trucking hedges, Pickens’s best efforts could fall short, edged out by a stout group of politicians, conservative think tanks and big oil, all of which prefer the status quo, for various reasons, but with money being the primary driver. Pickens is convinced trucking executives will join him, and foster the needed change in public policy that will take America away from its dependence on foreign oil.

There are positive signs trucking and its engine suppliers want to join Pickens. But time will tell. Either way, the trucking industry will play a pivotal role in deciding if the United States finally adopts an independent energy policy that Boone Pickens has worked so long to achieve. That’s a legacy the U.S. trucking industry should relish.