What is the Pickens Plan?
Posted on September 3, 2008 by Jonathan Carr |
T. Boone Pickens, founder and chairman, BP Capital Management, is principally responsible for the formulation of the energy futures investment strategy of the BP Capital Commodity Fund and the BP Capital Equity Fund. With more than $4 billion under management, BP Capital manages one of the nation’s most successful energy-oriented investment funds. Pickens frequently utilizes his wealth of experience in the oil and gas industry in the evaluation of potential equity investments and energy sector themes. He has not been shy in predicting oil and gas prices and — more often than not — has been uncannily accurate.
The Pickens Plan is very simple. We need to reduce our addiction to foreign oil. In 1970, we imported 24% of the oil we use. This year, we have imported close to 70% of the oil we use. These statistics clearly represent a dependency that must be rehabilitated. The Pickens Plan will attempt to do just that.
The price we pay for that 70% of foreign oil is about $700 billion (4 times the annual cost of the War in Iraq). According to the Pickens Plan, the next 10 years will cost $10 trillion which accounts for the greatest transfer of wealth in the history of mankind. Another interesting statistic, according to Pickens Plan, is that 25% of the worlds oil demand will be used by 4% of the population.
WIND
The Pickens Plan really likes the idea of wind energy. In fact, the plan even refers to The United States as being the Saudi Arabia of wind power as illustrated below:
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.
NATURAL GAS
The Pickens Plan does not just include the power of wind. It also focuses on using natural gas for automotive fuel.
Natural gas is cleaner:
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.
Iran is switching to natural gas for automotive transportation. You know why? So that they can sell all of their oil to countries like The United States.
Natural gas is cheaper:
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 cngprices.com.
SUMMARY
Since 98% of natural gas comes from North America, it is easy to see how this would reduce our dependency compared to 70% of foreign oil. Since 22% of our US energy comes from natural gas, by utilizing wind for energy, natural gas can be shifted to the automotive industry.
Often, people suggest plans to reduce our addiction to oil, but they do not act. We all know that talk is cheap. The Pickens Plan might not be the “right answer,” however, it is sure better than “no answer.” There are people who are pushing nuclear and solar energy as save-all solutions. There are also people pushing for more drilling in Alaska and other places off the US coast. You know what? That’s great! Do it! There is no clear-cut single solution. It is going to take a collaborative attempt of all technologies and resources to get us out of this mess. Why can’t we drill, build nuclear plants, install solar panels, AND put the Pickens Plan into effect? The whole is greater than the sum of it’s parts. The bottom line is that the Pickens Plan is a solid attempt to get the ball rolling in the right direction by utilizing wind and natural gas to reduce our addiction and dependency on foreign oil. You can count me in!
REFERENCES
All text in italics represent content from The Official Pickens Plan Web Site.
All images also from The Official Pickens Plan Web Site.
Comments
5 Responses to “What is the Pickens Plan?”
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Nuclear is the way to go. Everything else is a laughable attempt.
Nuclear energy could in fact power everything, however; It is unrealistic for that scenario to be realized. Jonathan is right. A combination of all efforts (ie: nuclear, solar, wind, natural gas, more drilling in the US, etc.) will amount to a realistic dependency reduction on foreign energy.
Exactly Pete! This issue was greatly discussed on Babeled. It would take a lot of time and money to go all nuclear. There is no black and white one solution.
The Pickens Plan doesn’t aim to solve the entire energy crisis. It aims to reduce foreign dependency so that the billions of dollars we export can be used domestically to better our own economy…money that can be used as incentives for people to switch to better forms of renewable energy.
I’ve seen this guy’s ads on TV and been curious about the details. With the natural gas and wind monopoly on the Plains, it seems like a no-brainer to at least start trying this sometime soon.
[...] to think it is a great idea. I say build lots of windmills offshore and on mountain-tops. The Pickens Plan incorporates wind energy. Remember, it is all about the combination of all clean energy sources, [...]