Prophet or Con Man?
T. Boone Pickens has broadcast his way right into the middle of a presidential election debate about United States energy policy. Americans are upset about $4-a-gallon gasoline, and the iconoclastic oilman has bought a lot of airtime to tell us what he thinks about the situation. Pickens" views have injected some fresh air into the public dialogue, and most of his ideas stand up pretty well to the scrutiny of serious energy analysis. But we must be careful not to replace one set of problems with another.
Time for an Oil Change
His ads and website warn about the money sucked out of the American economy by its negative balance of trade in energy. Pickens has identified a problem as least as big as high prices at the pump: The energy trade deficit is larger than our trade imbalance with China and far more costly than the war in Iraq. Moreover, much of the money ends up in the hands of America's enemies. Though some laissez-faire economists find this situation acceptable, it's hard to argue that our dependence on foreign oil can be sustained at current levels over the long haul without further damage to the dollar and the general U.S. economy.
A vigorous American Petroleum Institute advertising campaign, President Bush and presidential candidate John McCain imply we can drill our way out of our dependence on foreign oil. Pickens disagrees. Again, score one for the man living in our television screens. Offshore oil drilling is expensive and unlikely to lower oil prices or have a dramatic impact on the world oil market. We shouldn't rule out some carefully monitored expansion of lands available for exploration and development. But opening up more offshore areas in a country that has been drilling away since 1859 won't be a game-changer in an expanding world oil market.
A New National Standard
Pickens emphasizes renewable energy, particularly wind power, as a solution to our energy predicament. Wind supplies a significant share of energy in some European countries and is growing here. We should expand the role it plays in electric generation. But overemphasis on wind can distract attention from solar power and biofuels (not derived from food products), which offer greater potential for further technical development.
The idea that we should use government subsidies to get wind and other renewables into the market overlooks a big problem. The amount of fuel we consume is so large that subsidies will have unacceptable budget impacts for any fuel that achieves broad usage. The key policy here is making sure the fossil fuels pay their own way for external costs related to national security and the environment. We should also adopt a national renewable electric generation standard that mandates a greater share for these clean and domestic sources, as many states have already done. Last year, the U.S. Senate came very close to breaking a filibuster against such a standard. After what has transpired since that vote, Congress should quickly adopt the standard next year with tougher provisions than in the 2007 version.
Steering Clear of Natural Gas
Pickens correctly points out that expanded use of wind and solar, while intermittent, can save significant amounts of natural gas, the most environmentally benign of our fossil fuels and largely available from domestic sources. He then advocates that natural gas resulting from this displacement be used to power America's vehicles. This would cut the need for foreign oil, reduce pollution and has been technically doable for a long time. But this is the fork in the road where Pickens makes the wrong turn. Until we figure out how to sequester the carbon emissions from coal-based electricity or add significantly to the number of nuclear plants, we face a critical need for natural gas to reduce the use of coal. After having ignored the problems of greenhouse gases and global warming for decades, our nation cannot add more coal plants without risking great damage to our climate. There's not enough gas to take on bigger roles for both transportation and electricity.
Fortunately, there are other alternatives for powering our cars and trucks that will work as well or better than natural gas. First and foremost, we need to demand more efficient vehicles. The Energy Independence and Security Act passed last year mandates that the 25 miles per gallon (MPG) currently required for cars and light trucks be raised to 35 MPG by the year 2020. But we should not have much trouble raising the standard by a mile and a half a year. That gets us to 40 MPG by 2020 and 55 MPG by 2040. Ethanol produced from corn kernels is not worth the federal subsidies currently provided. But we should be utilizing liquid fuels from other plant sources, such as corn stover (the waste materials left over), bagasse from sugar cane, wood chips and switchgrass. Even more exciting, but perhaps further down the road, is biofuel produced from algae. We also have the option of plug-in electric hybrid vehicles, which are very attractive economically, especially if recharging takes place at night when the demand on the electric grid is low. In other words, we can take the bold action Pickens calls for and still reserve natural gas for electric generation.
The Texan who wants to end our addiction to foreign oil may not have every detail right, but we should be grateful that he's calling for some mighty big solutions to some mighty big problems.
CONTACT: T. Boone Pickens" website
From 1993 to 2000, JAY HAKES headed the Energy Information Administration, the data and analytic arm of the U.S. Department of Energy. He has just published A Declaration of Energy Independence: How Freedom from Foreign Oil Can Improve National Security, Our Economy, and the Environment (John Wiley & Sons, 2008, $27.95).