Posted on 04/12/2011 2:53:21 PM PDT by ransomnote
Last week I interviewed the Texas energy baron T. Boone Pickens four consecutive nights in front of a live audience. Pickens would talk for 40 minutes and then I would interview him for 50 minutes. (Full disclosure: I was paid a fee to do this, not from Pickens but from the event’s owner.)
The Pickens presentations had an interesting underlying tension: Texas billionaire, oilman and Republican trying to convince earnest San Francisco Bay Area liberals about the virtues of natural gas. How did Pickens do in front of liberal, vaguely hostile audiences? Surprisingly well. He made his case with numbers.
Here is what Pickens said:
– Global demand for oil is 86-88 million barrels per day. It will be 90 million by the end of the year, due to global growth.
– Global production is 84 million barrels per day. Since production falls short of demand, prices have risen.
– America consumes 20 million barrels of oil per day. We produce 7 million barrels domestically and import the other 13 million barrels. Of the 13 million barrels of imported oil, 5 million come from OPEC – “nations that hate us,” says Pickens.
– The true cost of Middle Eastern oil is over $300 a barrel if you account for U.S. military presence in the Middle East, according to Pickens.
– “Drill baby, drill” – the conservative mantra to drill more oil from the Gulf of Mexico, off the East and West Coast shelves, and the Alaska Natural Wildlife Refuge (ANWR) would produce an extra 2 million barrels a day at best, says Pickens. The would raise America’s domestic production from 7 million to 9 million barrels but still leave America 11 million barrels short each day.
(Excerpt) Read more at blogs.forbes.com ...
T. Boone Pickens cares about only one thing, fleecing whomever he can. His blatant move to garner taxpayer funds for his wind projects is proof enough for me. He didn’t care that it solved nothing about our energy needs, he just wanted the Govts moolah.
T. Boone moved away from Wind two years ago and moved on to NG. I tend to agree with him on NG and its ability to power our transportation needs. He just wants us to make his gas play pay off.
Global production is 84 million barrels per day. Since production falls short of demand, prices have risen.
This is nonsensical. Demand for oil is dependent on price, so to set an absolute number for demand is nonsense.
The true cost of Middle Eastern oil is over $300 a barrel if you account for U.S. military presence in the Middle East, according to Pickens.
An interesting argument, if you accept the premise that our military is over there to ensure our oil supply. It's not a premise I accept.
“Drill baby, drill” – the conservative mantra to drill more oil from the Gulf of Mexico, off the East and West Coast shelves, and the Alaska Natural Wildlife Refuge (ANWR) would produce an extra 2 million barrels a day at best, says Pickens. The would raise America’s domestic production from 7 million to 9 million barrels but still leave America 11 million barrels short each day.
I see two problems here. First, this is the classic liberal argument about anything in economics: "that won't completely solve the problem, so it's not worth doing." But if we accept his supply and demand numbers, that 2 million bpd would even the current supply/demand imbalance, stabilizing oil prices significantly.
My second problem is this: Boone Pickens is not a neutral observer. He has an agenda, and he has skin in this game. He is heavily invested in natural gas, and so any lecture by him should be seen as a sales pitch, not as commentary. His credibility is thus in the same league as Al Gore's, when Gore is talking about "renewable" energy: he stands to make a fortune if people buy into his argument. There's nothing inherently wrong with that, but it should at least color how we see his arguments a bit: they may be valid and true, but don't take his word for it.
Using BOE, natural gas, at its current price, would be about $1.50 per gallon cheaper than diesel fuel.
So why does Pickens need to talk about it? Just sell it; the market should be interested if that's true.
Using BOE, natural gas emits 30% less carbon
Who the hell cares?
Boone Pickens wants to convert America’s 140,000-unit fleet of 18-wheel truckers to run on natural gas.
Truckers run on greasy food, not diesel, so I'll assume he means trucks, not truckers. And if Pickens wants to convert all those trucks, he'd better start buying them.
Pickens says the cost of converting the next-generation fleet of 18-wheelers would be about $60,000 per vehicle – or roughly $9 billion for the entire 140,000 fleet. Where will that money come from?
Um...the owners of the trucks, if they choose to convert?
Last week, Congressmen John Sullivan (R-OK), Dan Boren (D-OK), John Larson (D-CT) and Kevin Brady (R-TX) introduced H.R. 1380, the ‘New Alternative Transportation to Give Americans Solutions’ (NAT GAS) Act to supply the funds. It would ladle out a billion or two a year.
Duh, what was I thinking. Of course billionaire Pickens wants *me* to pay for the conversion, whether I like it or not.
Is this a smart use of government funds at a time when the government is essentially broke?
Um, no?
Yes, I think so.
Well, crap. Wrong again.
If you believe the Pickens numbers, our imported OPEC oil is costing America $2 billion a day and would cost $6 billion a day if unsubsidized by the U.S. military presence in the Middle East. Also, some percentage of the money we send to Saudi Arabia makes its way to our enemies, such as the Taliban.
I suppose now you're going to tell us why taxpayers should be forced to pay for this.
But if natural gas is so economically compelling, why won’t private investors come up with the funds?
I don't know, please explain it to me!
It’s a critical mass problem, argues Pickens. America needs to prime the pump, as it were, to get the wheels turning. Start with 18-wheelers, he says, and that will create a national infrastructure of conversion technology and delivery.
Right, which is why the government had to force us all to buy cars; otherwise we'd all still be traveling by horseback.
To my libertarian friends: Don’t forget that the U.S. government bought the first billion dollars worth of semiconductors in the 1960s. That created the funds for factories and volume manufacturing which in turn drove prices down to affordable levels for civilian uses. Industrial policy? Yes.
Did the government buy those semiconductors to give to companies to use in their operations, or did they buy them because they needed them? Did they buy those semiconductors to jump-start the industry, or to equip the space program or the military? Make-work programs do not create wealth.
America’s commercial use of its vast, cheap, natural gas reserves will take a bipartisan political effort.
Bullsh*t. Let the market decide, and tell Pickens that rent seeking is despicable behavior.
Republicans will have to say no to the Tea Party and their hostility toward government funding.
They'll pry my hostility from my cold, dead hands.
Bipartisan consensus is a rarity these days. It is certainly out of fashion. But energy independence will demand it.
Again, bullsh*t.
from the comments at the link:
Bruce Upbin Bruce Upbin Tradigital
Boone is nothing if not persistent (and often persuasive). These are the same California voters who turned down Prop. 10 in 2008, which Boone heavily backed and which was supposed to authorize the state to borrow up to $5 billion to pay for nat-gas vehicle rebates, refueling station gear and R&D. Didn’t pass. Boone is back now focusing on an easier black-to-blue carbon conversion target–trucks and other heavy vehicles. A shrewd evolution in the Pickens plan.
Did Boone tell you he was Texan? He’s most definitely a Sooner.
Considering his gigantic donations to the Oklahoma State Cowboys' athletic department, Pickens might see those as fighting words.
I don’t follow sports so I assumed the commenter that I quoted meant that ‘Sooners never give up’ or ‘...don’t know when to quit’ or something like that. Since you point out he’s wrong and those are fightin’ words, could you, in a sentence or two explain the intent of using the Sooners or was it just a guess at a TX team?
An interesting argument, if you accept the premise that our military is over there to ensure our oil supply. It's not a premise I accept
If the US military isn't in the Middle East to protect the free flow of oil, why is it there? Why isn't it in the Congo, Somalia or Burma?
http://www.energytribune.com/articles.cfm/6933/US-Has-Earths-Largest-Energy-Resources
Re: post 4 - good post, and a good rebuttal.
http://www.energytribune.com/articles.cfm/6933/US-Has-Earths-Largest-Energy-Resources
http://www.energytribune.com/articles.cfm/6933/US-Has-Earths-Largest-Energy-Resources
Well, we're in Afghanistan because of 9/11, and we're in Iraq for related reasons, though I believe we should have gone about both missions quite differently. We're in Libya because President Obama is an idiot.
Is the taxpayers money or the governments that Pickens is after?
Is there a difference? From my POV, everything we have, is in reality govt property whenever they want it back.
The simplest thing for Pickens to do would be start a small trucking line and convert all the rigs to NG and as they were converted set up a few NG filling stations along their routes.
With a $1.50/gal. advantage it would help off-set the initial cost and demonstrate the value of NG as a motor fuel.
A money making business would do more than a thousand talk shows to sell NG.
Whoever has control, it’s their money and that ain’t us.
Well no need for me to comment now. You covered it all quite nicely.
Well done!
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