The Pickens Plan

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The T. Boone Pickens Plan

Texas to Tel Aviv

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ARTICLE from Cutting Edge, 7-7-08, by Gal Luft

``Kicking Our Oil Addiction

If Iran and Brazil Can Do It, So Can We

When the founding fathers declared our independence, they could not have imagined that, 232 years later, the United States would be so spectacularly dependent on foreign countries. It would be roughly eight more decades before oil gushed from a well in Titusville, Pennsylvania, marking the beginning of the global oil economy; it took eight decades more for the United States to become a net oil importer. But the republic's disastrous dependence on foreign oil has increased by leaps and bounds ever since.

In 1973, when OPEC imposed its oil embargo, U.S. oil imports composed 30 percent of our needs; today, they make up more than 60 percent, with a growing proportion of that crude coming from the world's least stable regions. At around $145 a barrel, the United States, by my calculations, will spend more on imported oil this year than it will spend on its own defense budget, and much of that money will flow into the coffers of those who wish us ill.

Since oil dependence is so unappealing, you'd think that energy independence would be an easy sell, especially on this Fourth of July weekend. But in fact, very few policy ideas have been so ridiculed. A 2007 report by the National Petroleum Council, a privately funded group that offers advice from the oil and gas industries to the federal government, calls energy independence "unrealistic" ...

Is energy independence a pipe dream? Hardly. In the electricity sector, the mission has already been accomplished. Remember President Jimmy Carter in his cardigan during the oil crises of the 1970s, urging Americans to save electricity? It took us just one decade to wean the electricity sector from oil. Today, only 2 percent of U.S. electricity comes from oil, according to the Energy Department.

Could we do something similar with transportation, where American cars and trucks still gulp oil-based fuel greedily? At least four very different countries -- dictatorships and democracies alike -- are already making serious headway toward that goal. It's past time to pay attention to their example.

[Iran]

The first country, surprisingly enough, is Iran. The Islamic republic has lots of crude but little capacity to refine it, leaving Tehran heavily dependent on gasoline imports. The country's blustery president, Mahmoud Ahmadinejad, is fully aware that this is Iran's Achilles' heel and worries that a comprehensive gasoline embargo could cause enough social unrest to undermine his regime.

So Ahmadinejad has launched an energy-independence program designed to shift Iran's transportation system from gasoline to natural gas, which Iran has plenty of ...

His plan includes a mandate for domestic automakers to make "dual-fuel" cars that can run on both gasoline and natural gas, a crash program to convert used vehicles to run on natural gas and a program to convert Iranian gas stations to serve both kinds of fuel.

According to the International Association of Natural Gas Vehicles, more than 100 conversion centers have been built throughout the country: Iranians can drive in with their gasoline-only cars, pay a subsidized fee equivalent to $50 and collect their newly dual-fuelled cars several hours later. Ahmadinejad's plan, which has been largely ignored by the West, means that within five years or so, Iran could be virtually immune to international sanctions.

[Brazil]

While Iran is moving quickly toward energy independence, Brazil is already there. It's a striking turnaround; three decades ago, the country imported 80 percent of its oil supply. But since the 1973 Arab oil embargo, the Brazilians have invested massively in their sugar-based ethanol industry and created a fleet of vehicles that can run on the resulting fuel. According to the Sugar Cane Industry Union (Unica), 90 percent of the new cars sold this year in Brazil will be flexible-fuel vehicles that cost an extra $100 to make but can run on any combination of gasoline and ethanol.

Lest anyone think that can't be done in the United States, many of those new cars are made by General Motors and Ford. All it really takes to turn a regular car into a flex-fuel one is a fuel sensor and a corrosion-resistant fuel line ...

Its efforts have not only broken the yoke of Brazil's oil dependence but also insulated the country's economy from the pain of the current spike in global oil prices. Gasoline prices have nearly doubled elsewhere since 2005, but in Brazil, they have been almost frozen. This year, more ethanol will be sold in Brazil than gasoline. Sounds pretty good, doesn't it?

[China]

Like Brazil, China has decided to replace gasoline with alternative fuels. But unlike the United States and Brazil, where the favorite substitute is ethanol, China has embraced a different alcohol: methanol. Several provinces in China already blend their gasoline with methanol, a clear, colorless liquid also known as wood alcohol, and scores of methanol plants are currently under construction there.

The Chinese auto industry has already begun to produce flex-fuel models that can run on methanol. Shanxi, a province in central China that produces much of the country's coal, has even issued stickers granting cars that use pure methanol free passage on the province's toll roads ...

Methanol is cheaper [than ethanol] and far easier to produce in bulk. While ethanol can be made only from agricultural products such as corn and sugar cane, methanol can be made from natural gas, coal, industrial garbage and even recycled carbon dioxide captured from power stations' smokestacks -- an elegant way to reduce greenhouse gas emissions.

[Israel]

Israel offers a fourth testament to what leadership, ingenuity and audacity can achieve. Last year, it launched an electric-car venture designed to turn Israel -- which obviously has some tensions with the region's big oil producers -- into an oil-free economy.

Israelis will soon be able to replace their gasoline-fueled cars with battery-operated ones, which they'll plug into the hundreds of thousands of recharging points planned to be erected throughout the country. Israeli motorists, the government hopes, will be able to swap their batteries in a matter of minutes at dedicated stations or recharge them at home or at work.

"Oil is the greatest problem of all time -- the great polluter and promoter of terror," said Israeli President Shimon Peres, the project's political patron. "We should get rid of it."

For each of the four countries, knocking oil off its pedestal is no longer a theoretical proposition but a reality in the making. But despite the lip service our own politicians pay to the need to reduce our oil dependence, none of the solutions offered by Iran, Brazil, China and Israel are even under consideration in the land of the free and the home of the brave.

Just go down the list. Natural-gas vehicles are nowhere to be seen. Brazilian sugar-cane ethanol is barred from the country by a steep 54-cent-per-gallon import tariff, courtesy of ethanol protectionists and their representatives in Congress. (No tariff is imposed on imported oil, of course.)

For similar reasons, flex-fuel cars sold in the United States are certified to run only on ethanol, keeping methanol and other viable biofuels off the market -- even though they are cheaper and can be made from a wealth of coal and biomass resources.

The kind of electric cars deployed in Israel have never returned to U.S. showrooms since General Motors' mass crushing of its EV1 -- the subject of the documentary "Who Killed the Electric Car?" ...''

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Commentator 1 wrote on 7-9-08:

``Good news that oil folks are getting on the band wagon ...

www.pickensplan.com/theplan/

The T. Boone Pickens Plan

America is addicted to foreign oil. It's an addiction that threatens our economy, our environment and our national security. It touches every part of our daily lives and ties our hands as a nation and a people.

The addiction has worsened for decades and now it's reached a point of crisis. In 1970, we imported 24% of our oil. Today it's nearly 70% and growing.

As imports grow and world prices rise, the amount of money we send to foreign nations every year is soaring. At current oil prices, we will send $700 billion dollars out of the country this year alone - that's four times the annual cost of the Iraq war.

Projected over the next 10 years the cost will be $10 trillion; it will be the greatest transfer of wealth in the history of mankind.

America uses a lot of oil. Every day 85 million barrels of oil are produced around the world. And 21 million of those are used here in the United States. That's 25% of the world's oil demand. Used by just 4% of the world's population ...

What's the good news?

The United States is the Saudi Arabia of wind power. Studies from around the world show that the Great Plains states are home to the greatest wind energy potential in the world by far.

The Department of Energy reports that 20% of America's electricity can come from wind. North Dakota alone has the potential to provide power for more than a quarter of the country.

Today's wind turbines stand up to 410 feet tall, with blades that stretch 148 feet in length. The blades collect the wind's kinetic energy. In one year, a 3-megawatt wind turbine produces as much energy as 12,000 barrels of imported oil.

Wind power currently accounts for 48 billion kWh of electricity a year in the United States -- enough to serve more than 4.5 million households. That is still only about 1% of current demand, but the potential of wind is much greater.

A 2005 Stanford University study found that there is enough wind power worldwide to satisfy global demand 7 times over -- even if only 20% of wind power could be captured.

Building wind facilities in the corridor that stretches from the Texas panhandle to North Dakota could produce 20% of the electricity for the United States at a cost of $1 trillion. It would take another $200 billion to build the capacity to transmit that energy to cities and towns.

That's a lot of money, but it's a one-time cost. And compared to the $700 billion we spend on foreign oil every year, it's a bargain.

Developing wind power is an investment in rural America.

To witness the economic promise of wind energy, look no further than Sweetwater, Texas.

Sweetwater was typical of many small towns in middle-America. With a shortage of good jobs, the youth of Sweetwater were leaving in search of greater opportunities. And the town's population dropped from 12,000 to under 10,000.

When a large wind power facility was built outside of town, Sweetwater experienced a revival. New economic opportunity brought the town back to life and the population has grown back up to 12,000.

In the Texas panhandle, just north of Sweetwater, is the town of Pampa, where T. Boone Pickens' Mesa Power is currently building the largest wind farm in the world. At 4,000 megawatts -- the equivalent combined output of four large coal-fire plants -- the production of the completed Pampa facility will double the wind energy output of the United States.

In addition to creating new construction and maintenance jobs, thousands of Americans will be employed to manufacture the turbines and blades. These are high skill jobs that pay on a scale comparable to aerospace jobs.

Plus, wind turbines don't interfere with farming and grazing, so they don't threaten food production or existing local economies.

A cheap new replacement for foreign oil.

The Honda Civic GX Natural Gas Vehicle is the cleanest internal-combustion vehicle in the world according to the EPA.

Natural gas and bio-fuels are the only domestic energy sources used for transportation. Natural gas is the cleanest transportation fuel available today.

According to the California Energy Commission, critical greenhouse gas emissions from natural gas are 23% lower than diesel and 30% lower than gasoline.

Natural gas vehicles (NGV) are already available and combine top performance with low emissions. The natural gas Honda Civic GX is rated as the cleanest production vehicle in the world.

According to NGVAmerica, there are more than 7 million NGVs in use worldwide, but only 150,000 of those are in the United States.

The EPA estimates that vehicles on the road account for 60% of carbon monoxide pollution and around one-third of hydrocarbon and nitrogen oxide emissions in the United States. As federal and state emissions laws become more stringent, many requirements will be unattainable with conventionally fueled vehicles.

Since natural gas is significantly cleaner than petroleum, NGVs are increasing in popularity. The Ports of Los Angeles and Long Beach recently announced that 16,800 old diesel trucks will be replaced, and half of the new vehicles will run on alternatives such as natural gas.

Natural gas is significantly less expensive than gasoline or diesel. In places like Utah and Oklahoma, prices are less than $1 a gallon. To see fueling stations and costs in your area, check out www.cngprices.com/

Natural gas is our country's second largest energy resource and a vital component of our energy supply. 98% of the natural gas used in the United States is from North America. But 70% of our oil is purchased from foreign nations.

Natural gas is one of the cleanest, safest and most useful forms of energy -- residentially, commercially and industrially. The natural gas industry has existed in the United States for over 100 years and continues to grow.

Domestic natural gas reserves are twice that of petroleum. And new discoveries of natural gas and ongoing development of renewable biogas are continually adding to existing reserves.

While it is a cheap, effective and versatile fuel, less than 1% of natural gas is currently used for transportation.

The Mechanics

We currently use natural gas to produce 22% of our electricity. Harnessing the power of wind to generate electricity will give us the flexibility to shift natural gas away from electricity generation and put it to use as a transportation fuel -- reducing our dependence on foreign oil by more than one-third.

How do we get it done?

The Pickens Plan is a bridge to the future -- a blueprint to reduce foreign oil dependence by harnessing domestic energy alternatives, and buy us time to develop even greater new technologies.

Building new wind generation facilities and better utilizing our natural gas resources can replace more than one-third of our foreign oil imports in 10 years. But it will take leadership ...''

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Commentator 2 wrote:

Despite its obvious (at least to me) insanity, the proposal to drill oil wells in ANWR and off the coasts of California and Florida seems to be riding high on a tsunami of gullibility.

I think the moral of the Appointmnet in Samarra is not that one cannot escape Death, but that we can choose where to die. And thus it is important where we fight the Kondratieff Peak War of 2020 -- will we send young Americans to Central Asia to die for oil in the Kazakh War of 2020? Continuing to use petroleum is probably the most serious threat ever to American national security. So Hooray for T. Boone Pickens.

If the Strait of Hormuz is closed, rock oil could be $300/barrel by Christmas 2008. Otherwise it is likely that oil will be $40/barrel by the end of the year -- just like the Tulip Bubble, the bursting of the Oil Bubble will be spectacular. But then what happens to Alternative Energy?, the 1970's all over again?

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www.nytimes.com/2008/07/27/opinion/27friedman.html'_r=3&ref=opinion&oref=slogin&oref=slogin&oref=slogin

COLUMN from The New York Times, 7-27-08, By THOMAS L. FRIEDMAN

``Texas to Tel Aviv

What would happen if you cross-bred J. R. Ewing of 'Dallas' and Carl Pope, the head of the Sierra Club' You'd get T. Boone Pickens. What would happen if you cross-bred Henry Ford and Yitzhak Rabin' You'd get Shai Agassi. And what would happen if you put together T. Boone Pickens, the green billionaire Texas oilman now obsessed with wind power, and Shai Agassi, the Jewish Henry Ford now obsessed with making Israel the world's leader in electric cars'

You'd have the start of an energy revolution.

The only good thing to come from soaring oil prices is that they have spurred innovator/investors, successful in other fields, to move into clean energy with a mad-as-hell, can-do ambition to replace oil with renewable power. Two of the most interesting of these new clean electron wildcatters are Boone and Shai.

Agassi, age 40, is an Israeli software whiz kid who rose to the senior ranks of the German software giant SAP. He gave it all up in 2007 to help make Israel a model of how an entire country can get off gasoline and onto electric cars.

He figured no country has a bigger interest in diminishing the value of Middle Eastern oil than Israel. On a visit to Israel in May, I took a spin in a parking lot on the Tel Aviv beachfront in Agassi's prototype electric car, while his sister watched out for the cops because it is not yet licensed for Israeli roads.

Agassi's plan, backed by Israel's government, is to create a complete electric car 'system' that will work much like a mobile-phone service "system," only customers sign up for so many monthly miles, instead of minutes. Every subscriber will get a car, a battery and access to a national network of recharging outlets all across Israel as well as garages that will swap your dead battery for a fresh one whenever needed.

His company, Better Place, and its impressive team would run the smart grid that charges the cars and is also contracting for enough new solar energy from Israeli companies, 2 gigawatts over 10 years, to power the whole fleet. 'Israel will have the world's first virtual oilfield in the Negev Desert," said Agassi. His first 500 electric cars, built by Renault, will hit Israel's roads next year.

Agassi is a passionate salesman for his vision. He could sell camels to Saudi Arabia. 'Today in Europe, you pay $600 a month for gasoline," he explained to me. 'We have an electric car that will cost you $600 a month', with all the electric fuel you need and when you don't want the car any longer, just give it back. No extra charges and no CO2 emissions.

His goal, said Agassi, is to make his electric car 'so cheap, so trivial, that you won't even think of buying a gasoline car." Once that happens, he added, your oil addiction will be over forever. You'll be 'off heroin," he says, and 'addicted to milk."

T. Boone Pickens is 80. He's already made billions in oil ... But now he's opting for a different legacy: breaking America's oil habit by pushing for a massive buildup of wind power in the U.S. and converting our abundant natural gas supplies, now being used to make electricity, into transportation fuel to replace foreign oil in our cars, buses and trucks.

Pickens is motivated by American nationalism. Because of all the money we are shipping abroad to pay for our oil addiction, he says, 'we are on the verge of losing our superpower status." His vision is summed up on his Web site: 'We import 70 percent of our oil at a cost of $700 billion a year ... I have been an oil man all my life, but this is one emergency we can't drill our way out of. If we create a renewable energy network, we can break our addiction to foreign oil."

Pickens made clear to me over breakfast last week that he was tired of waiting for Washington to produce a serious energy plan. So his company, Mesa Power, is now building the world's largest wind farm in the Texas Panhandle, where he's spent $2 billion buying land and 700 wind turbines from General Electric, the largest single turbine order ever. The U.S. could secure 20 percent of its electricity needs from wind alone.

But Pickens knows he's unique. Unless, he says, 'Congress adopts clear, predictable policies', with long-term tax incentives and infrastructure, so thousands of investors can jump into clean power, we'll never get the scale we need to break our addiction. For a year, Senate Republicans have been blocking such incentives for wind and solar energy. They vote again next week.

If only we had a Congress and president who, instead of chasing crazy schemes like offshore drilling and releasing oil from our strategic reserve, just sat down with Boone and Shai and asked one question: 'What laws do we need to enact to foster 1,000 more like you?' Then just do it, and get out of the way.''

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