Friday, July 11, 2008

The Pickens Plan








I was at the gym last night doing my cardio and watching Lou Dobbs. Then during a commerical break (where I normally tune out), I happened to catch an ad for "The Pickens Plan". Here's the website:

http://www.pickensplan.com/

The man in charge of this is T. Boone Pickens, the billionare oil man. I have been following him for a while and this guy is very, very smart!

Several years ago, when talking about oil prices, Pickens said in a interview that the world will never see much more than 85 million barrels a day in output no matter what we do. Why is this? Because any gains we get from new fields (like ANWAR or offshore drilling) will be completely offset by declines in existing, aged fields (like Cantarell in Mexico).

This is important. The era is cheap oil is over. From here on out oil is going to be expensive and difficult to get. Likewise, we import nearly 70% of our oil from foreign countries, meaning we spend $700 billion a YEAR on oil imports (that's 4x what we are spending in Iraq). We have to spend our wealth in order to get this oil, so every year our country becomes poorer while totalitarian countries like Saudi Arabia, Venezuela and Iran become richer.

Not only is this a bad idea, it's not sustainable and we need alternatives.

This is a viable solution and it makes a lot of sense. His proposal is to start a massive investment in wind power across the great plains of this country (which he identifies as one of the windiest areas in the world) and use that capacity to replace the electricity that is currently generated by natural gas power plants. We can then redirect the natural gas they were burning to our transportation network and he estimates that would reduce our oil imports by 38% in 10 years!

Natural gas should be thought of as an equivalent to oil. It is highly portable, can be transported through pipes, and has a high energy content per unit - all of these are the same as oil.

Oil is what powers our transportation because of it's portability and high energy content. That's the reason why you don't see any coal powered cars on the streets. Coal has to be mined (which is more difficult and expensive that drilling), it has to be transported by rail, and the energy content is much less than oil or natural gas (you get more BTUs out of a pound of oil than you do out of a pound of coal).

Right now about 20% of our electricity is powered by Natural Gas plants. Using Natural Gas to generate electricity is wasting a valuable resource. Natural Gas should be diverted to our transportation needs just like oil (we already do have natural gas vehicles in this country but they are not widespread).

Other benefits include helping revive many of these small towns in middle America that have been in economic decline for decades. This will also spur investment in cars that can run on natural gas and expanding the infrastructure to distribute natural gas (Now I'm thinking since most homes already have natural gas service, why not just add a pump at your house? You can fill up at home and pay for it when you pay your utility bill.- Business opportunity!!!!)

Does this solve the energy problems we have? Absolutely not, but I think it's a step in the right direction and will help reduce the price of oil (because demand will fall), increase the wealth of this country and help the environment (natural gas burns clean and wind power has no emissions).

I encourage you to talk to your friends and representatives in government about supporting the Pickens Plan.

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