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A Boon for Pickens, Not for America


By Gal Luft
Los Angeles Times
August 6, 2008


T. Boone Pickens' proposals to wean the country off foreign oil could provide
more benefit to Iran than to the U.S.

At a time of economic decline and record-high gas prices, there is something
refreshing in an oilman turning into one of the nation's leading advocates of
renewable energy. This could explain why T. Boone Pickens' multibillion-dollar
efforts to reduce America's oil dependence and develop clean energy have
garnered so muchpublic attention.

Pickens is right to suggest that America's oil dependence is a source of
economic ruin and that Congress must act to stop the biggest transfer of wealth
in human history. But Pickens stands to benefit from his own campaign -- and his
proposal could do more damage than good to U.S. energy security.
Pickens' proposal involves a California ballot initiative to provide $5 billion
in subsidies for developing clean-energy fuels on top of a $58-million public
relations campaign to reduce America's oil dependence through wind power. Not
coincidentally, the Texas oilman is heavily invested in natural gas and wind
power.

The Pickens plan promises to dramatically reduce oil use by shifting the
transportation sector from gasoline-powered cars and trucks to
natural-gas-powered vehicles. This would allegedly reduce oil imports by more
than 30% and would supposedly save the U.S. economy $300 billion that otherwise
would end up in the coffers of oil-rich foreign countries. According to the
plan, wind energy would substitute for natural gas, now generating 20% of the
nation's electricity, freeing natural gas to power a third of the vehicles in
the U.S.

There is nothing wrong with wind power. On the contrary, it is one of the
cheapest ways to generate renewable power. But since only 2% of U.S. electricity
is generated from oil, wind power (as well as nuclear power, solar energy and
other renewable power sources often touted by politicians and pundits) would do
nothing to reduce U.S. oil dependence unless we start using electricity to power
our vehicles.

Pickens' assertion that increased use of wind power would displace natural gas
is based on wishful thinking. Our energy system is not a Lego game -- one piece
can't replace another at whim. Even if 78 other billionaires were willing to
follow Pickens' footsteps and build a 4,000-megawatt wind farm -- that's the
number needed to displace the current electricity production from natural gas --
there's no way to guarantee that natural gas would be the only energy source
that would be displaced by all those turbines. Why not coal, or solar?

Furthermore, implementation of the Pickens plan might actually tie more natural
gas to the power sector. Wind is an intermittent source of power -- the wind
doesn't blow 24 hours a day, seven days a week -- and until and unless our
electricity grid has sufficient power storage capacity, utilities counting on
wind need to have backup power plants that can be powered up to fill in the gaps
when the wind does not blow. This back-up power is today generally provided with
natural gas.

Pickens also claims that a shift from oil to natural gas would strengthen U.S.
national security. But contrary to Pickens' proclamations, in relation to its
need, the U.S. is not rich in natural gas. Just as with oil, the U.S. consumes
23% of the world's natural gas but it only has 3% of the world's reserves. Its
reserve-to-production ratio is less than 10 years. At last month's Senate
Homeland Security and Governmental Affairs Committee hearing (in which both
Pickens and I testified), he invoked a recent Deutsche Bank study, "From Shale
to Shining Shale," which claims that there are massive reserves of gas shale in
the U.S. Just like oil shale, such unconventional energy sources hold great
promise. But their recovery costs are still high, and their existence has not
been able to suppress the rising price of either oil or natural gas.

A shift to natural gas could even weaken U.S. national security: More than 60%
of the world's reserves are concentrated in five countries -- Russia, Iran,
Qatar, Saudi Arabia and the United Arab Emirates -- countries that are already
engaged in discussions on the establishment of an OPEC-like natural-gas cartel.
Shifting from dependence on one authoritarian regime's energy source to
another's is like jumping from the frying pan to the fire. It's also the best
gift the U.S. can give Iran at a time when it should be working to weaken Tehran
economically.

At a time of great public anxiety about our energy future, Congress should focus
on policies that would grant Americans true energy independence, rather than
replace one dependence with another. Instead, Democrats and Republicans in the
House and the Senate have preferred to follow up on Pickens' plan with bills to
increase the use of natural gas as a transportation fuel. Such initiatives would
certainly be a boon for Pickens, but not for America.

Gal Luft is executive director of the Institute for the Analysis of Global
Security, a Washington-based energy policy think tank.




 

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