Month: July 2008

By Steven Milloy
July 31, 2008, FoxNews.com

The more you learn about T. Boone Pickens’ plan to switch America to wind power, the more you realize that he seems willing to say and do just about anything to make another billion or two.

This column previously discussed the plan’s technical and economic shortcomings and marketing ruses. Today, we’ll look into the diabolical machinations behind it.

Simply put, Pickens’ pitch is “embrace wind power to help break our ‘addiction’ to foreign oil.” There is, however, another intriguing component to Pickens’ plan that goes unmentioned in his TV commercials, media interviews and web site — water rights, which he owns more of than any other American.

Pickens hopes that his recent $100 million investment in 200,000 acres worth of groundwater rights in Roberts County, Texas, located over the Ogallala Aquifer, will earn him $1 billion. But there’s more to earning such a profit than simply acquiring the water. Rights-of-way must be purchased to install pipelines, and opposition from anti-development environmental groups must be overcome. Here’s where it gets interesting, according to information compiled by the Water Research Group, a small grassroots group focusing on local water issues in Texas.

Purchasing rights-of-way is often expensive and time-consuming — and what if landowners won’t sell? While private entities may be frustrated, governments can exercise eminent domain to compel sales. This is Pickens’ route of choice. But wait, you say, Pickens is not a government entity. How can he use eminent domain? Are you sitting down?

At Pickens’ behest, the Texas legislature changed state law to allow the two residents of an 8-acre parcel of land in Roberts County to vote to create a municipal water district, a government agency with eminent domain powers. Who were the voters? They were Pickens’ wife and the manager of Pickens’ nearby ranch. And who sits on the board of directors of this water district? They are the parcel’s three other non-resident landowners, all Pickens’ employees.

A member of a local water conservation board told Bloomberg News that, “[Pickens has] obtained the right of eminent domain like he was a big city. It’s supposed to be for the public good, not a private company.”

What’s this got to do with Pickens’ wind-power plan? Just as he needs pipelines to sell his water, he also needs transmission lines to sell his wind-generated power. Rights of way for transmission lines are also acquired through eminent domain — and, once again, the Texas legislature has come to Pickens’ aid.

Earlier this year, Texas changed its law to allow renewable energy projects (like Pickens’ wind farm) to obtain rights-of-way by piggybacking on a water district’s eminent domain power. So Pickens can now use his water district’s authority to also condemn land for his future wind farm’s transmission lines.

Who will pay for the rights-of-way and the transmission lines and pipelines? Thanks to another gift from Texas politicians, Pickens’ water district can sell tax-free, taxpayer-guaranteed municipal bonds to finance the $2.2 billion cost of the water pipeline. And then earlier this month, the Texas legislature voted to spend $4.93 billion for wind farm transmission lines. While Pickens has denied that this money is earmarked for him, he nevertheless is building the largest wind farm in the world.

Despite this legislative largesse, a fly in the ointment remains.

Although Pickens hopes to sell as much as $165 million worth of water annually to Dallas alone, no city in Texas has signed up yet — partly because they don’t yet need the water and partly because of resentment against water profiteering.

Enter the Sierra Club.

While Green groups support wind power, “the privatization of water is an entirely different thing,” says the Sierra Club. Moreover, the activist group has long opposed further exploitation of the very groundwater Pickens wants to use — the Ogallala Aquifer.

“The source of drinking water and irrigation for Plains residents from Nebraska to Texas, the Ogallala Aquifer is one of the world’s largest — as well as one of the most rapidly dissipating… If current irrigation practices continue, agribusiness will deplete the Ogallala Aquifer in the next century,” says the Sierra Club.

In March 2002, the Sierra Club opposed the construction of a slaughterhouse in Pampa, Texas, because it would require a mere 275 million gallons per year from the Ogallala Aquifer. Yet Pickens wants to sell 65 billion gallons of water per year — to Dallas alone. In a 2004 lamentation about local government facilitation of Pickens’ plan for the Ogallala, the Sierra Club slammed Pickens as a “junk bond dealer” who wanted to make “Blue Gold” from the Ogallala.

But while the Sierra Club can’t seem to do anything about Pickens’ influence with state legislators, they do have enough influence to make his water politically unpotable. This opposition may soon abate, however, now that Pickens has buddied up with Sierra Club president Carl Pope.

As noted last week, Pope now flies in Pickens’ private jet and publicly lauds him. The two are newly-minted “friends,” since Pope needs the famous Republican oilman to lend propaganda value to the Sierra Club’s anti-oil agenda and Pickens needs Pope to ease up on the Ogallala water opposition.

This alliance isn’t sitting well with everyone on the Left.

A TreeHugger.com writer recently observed, “… I am left asking myself why the green media have neglected [the water] aspect of Pickens’ wind-farm plans? Have we been so distracted by the prospect of Texas’ renewable energy portfolio growing by 4000 megawatts that we are willing to overlook some potentially dodgy aspects to the project?”

It shouldn’t sit well with the rest of us either. Pickens has gamed Texas for his own ends, and now he’s trying to game the rest of us, too. Worse, his gamesmanship includes lending his billionaire resources, prominent stature and feudal powers bestowed upon him by the Texas legislature to help the Greens gain control over the U.S. energy supply.

Steven Milloy publishes JunkScience.com and DemandDebate.com. He is a junk science expert, and advocate of free enterprise and an adjunct scholar at the Competitive Enterprise Institute.

By Steven Milloy
July 24, 2008, FoxNews.com

Liberals have done a U-turn on conservative billionaire oilman T. Boone Pickens.

Formerly reviled for funding the “Swift Boat Veterans for Truth” campaign against Sen. John Kerry, he’s now adored by the Left — unfortunately, for trying to gaslight the rest of us on energy policy.

This column recently spotlighted Pickens’ proposed plan to get America off foreign oil by substituting wind-generated electricity for natural gas-generated electricity and then using the natural gas to replace gasoline.

Already having addressed the proposal’s flaws — and Pickens’ plan to profit at taxpayer expense from it — let’s consider how Pickens’ marketing shades the truth.

On his Web site and in TV commercials, Pickens tries to frighten Americans about being “addicted to foreign oil.”

“In 1970, we imported 24 percent of our oil. Today, it’s nearly 70 percent and growing,” he intones.

Aside from the fact that the Department of Energy (DOE) puts the import figure at a more moderate 58 percent, Pickens gives the impression that imported oil is scary because it all comes from the unstable Mideast.

His TV commercials feature images of American soldiers fighting in Iraq and he likens the annual $700 billion cost of foreign oil to “four times the annual cost of the Iraq war.”

But hold the phone. Only 16 percent of our imported oil comes from the Persian Gulf — barely up from 13.6 percent in 1973, according to the DOE. Imports from OPEC countries are actually down — from 47.8 percent in 1973 to 44.5 percent in 2007.

Contrary to Pickens’ assertion that oil imports are growing, the DOE expects oil imports to decrease by 10 percent by 2030.

Pickens tries to shame Americans because, “America uses a lot of oil … That’s 25 percent of the world’s oil demand, used by just 4 percent of the world population.”

Some might think these figures make us sound greedy and wasteful.

But what Pickens omitted to mention is that the size of the U.S. economy in 2007 was about $13.8 trillion and the size of the global economy was $54.3 trillion.

This means that the U.S. economy represents about 25.4 percent of the global economy. So what’s the problem if a nation that produces 25 percent of the world’s goods and services needs 25 percent of the world’s oil output?

Would he prefer that we shrink our economy by 84 percent to match our share of world population?

Pickens plays the hope-squasher.

“Can’t we just produce more oil?” he asks. “The simple truth is that cheap and easy oil is gone,” he responds.

But there are hundreds of billions of barrels of oil in the form of oil tar sands and oil shale in North America, not to mention the more than one hundred billion barrels of oil in the outer continental shelf of the U.S. and on public lands like the Arctic National Wildlife Preserve (ANWR).

And don’t forget that coal-to-liquids technology can convert our 268 billion tons of coal into 20 times the nation’s current crude oil reserves, according to investment analysts. We have liquid fuels to burn.

While producing this oil may not be as easy as it was in 1859, when crude oil bubbled out of the ground in northwest Pennsylvania, it is much more feasible and far less expensive than Pickens’ fantasy of replicating the entire existing U.S. wind supply system every year for the next 15 years in addition to building the national infrastructure for natural-gas filling stations.

Finally, Pickens laments the $700 billion (less at current oil prices) “wealth transfer” from America to foreigners every year because of our “addiction.”

But is he also concerned about our “addiction” to other imports?

In 2007, the U.S. merchandise trade deficit — the difference between imports of goods from and exports of goods to foreign countries — exceeded $815 billion.

Contrary to Pickens’ demagoguery, “wealth transfer” is a term generally used in the context of estate planning, where money is simply “gifted” to heirs.

Our purchases of foreign oil, in contrast, are more reasonably known as “trade” — and trade is good.

Americans are not simply petro-junkies who mainline crude oil for the masochistic high of watching gas pump numbers spin faster. We produce goods and services with imported oil more than any other people on this planet.

Pickens’ bad-mouthing of our use of oil sounds like it comes from Al Gore and his fellow Democrats and extreme Greens — and guess who Pickens’ new friends are?

Pickens told the National Journal that, “I think I would be for Al Gore for energy czar [in an Obama administration].”

Pickens said that he and Gore agree on about 95 percent of their respective energy plans.

House Speaker Nancy Pelosi invited Pickens to speak before the Democratic Caucus.

Senate Majority Leader Harry Reid says that, while Pickens was once a “mortal enemy,” they are now friends because of the oilman’s conversion to alternative energy.

Then there’s Carl Pope, the head of the Sierra Club, who not only flies in Pickens’ private jet but writes paeans about him on the liberal Huffington Post blog.

“T. Boone Pickens is out to save America,” Pope wrote on July 3.

It would have been more accurate, perhaps, for Pope to write that “Pickens is out to make billions of dollars for himself and to save the Sierra Club’s anti-coal, anti-oil, anti-natural gas agenda.”

Lastly, the New York Times rhapsodized about Pickens in an editorial this week.

Pickens’ involvement in the alleged swiftboating of John Kerry seems to have been forgiven and forgotten by the paper. But the Times went absolutely over-the-top when it observed that the billionaire Pickens wasn’t in it for the money because “he doesn’t really need it.”

It’s too bad we can’t generate electricity from such hilarity, half-truths and hypocrisy. Pickens and his new friends could power us — as Buzz Lightyear might say — to infinity and beyond.

Steven Milloy publishes JunkScience.com and DemandDebate.com. He is a junk science expert, advocate of free enterprise and an adjunct scholar at the Competitive Enterprise Institute.

By Steven Milloy
July 17, 2008, FoxNews.com

President Bush almost got it right this week when he declined to call on Americans to conserve energy. Sadly, he still seems to think that conservation is a win-win proposition; worse, so do both major presidential candidates.

A reporter, saying the energy debate will continue into the next administration, told President Bush that “one thing nobody debates is that if Americans use less energy the current supply/demand equation would improve. Why have you not sort of called on Americans to drive less and to turn down the thermostat?”

Bush responded: “They’re smart enough to figure out whether they’re going to drive less or not … it’s interesting what the price of gasoline has done, is it caused people to drive less. That’s why they want smaller cars, they want to conserve. But the consumer is plenty bright. … The marketplace works.

“Secondly, we have worked with Congress to change CAFE standards and had a mandatory alternative fuel requirement,” he continued. “One way to correct the imbalance is to save, is to conserve. … I talked about good conservation. And people can figure out whether they need to drive more or less; they can balance their own checkbooks.”

“But you don’t see the need to ask? You don’t see the value of your calling for a campaign?” the reporter persisted.

“I think people ought to conserve and be wise about how they use gasoline and energy … and there’s some easy steps people can take. You know, if they’re not in their home, they don’t keep their air-conditioning running,” Bush said, adding that “it’s a little presumptuous on my part to dictate to consumers how they live their lives.”

While muddled thinking thrives on both sides of this exchange — the current crisis is about $4-plus gasoline, not electricity, and while Bush says he won’t tell Americans to conserve, he still boasts of mandatory fuel efficiency standards — it should tee up the issue of conservation for debate.

The reporter positioned conservation as an indisputable virtue. But is it? Is conservation good public policy?

For individuals, conservation is better described as a “necessity” rather than a “virtue.” People use less gasoline not because they want to or because it makes them feel good or so that someone else can use more, but because prices have spiked and they’ve been forced to drive less or drive smaller cars. Need is not virtue.

Conservation also isn’t necessarily a virtue for those consumers who are unfazed by $4 gasoline, but nevertheless vainly choose to conserve to achieve some imagined “greater purpose,” such as “saving the planet” or “reducing our dependence on foreign oil.” This is, in fact, where conservation becomes, if anything, an anti-virtue.

In our modern society, using less gasoline means doing less and, most importantly, it means spending less. It means fewer shopping trips, less eating out, fewer pleasure trips and less employment in those businesses to where you drive.

It means fewer cars, pleasure boats and airplanes, and fewer jobs in the industries that manufacture those goods. Using less gasoline means engaging in less economic activity.

If you don’t remember the 1970s and very early 1980s, the last time conservation was all the rage, consider that every economic slowdown of the last 35 years, that is, the recessions of 1973-1975, 1979-1980, 1981-1982 and 1990-1991, has been associated with, if not caused by, a decline in oil consumption.

Whenever oil consumption increased, GDP did, too. The same goes for total energy consumption.

Additionally, conservation policies have undesirable side effects. Higher fuel efficiency standards result in lighter, more dangerous cars. Airtight, energy-efficient buildings — like the ones constructed during the 1970s — produced a host of indoor air quality problems such as “sick building syndrome” and asthma-causing cockroach allergens in public housing.

But if we keep burning more and more gasoline, won’t we run out or become even more dependent on foreign oil? That can only happen if we continue to permit the greens to dictate national energy policy.

Not only does the United States have vast reserves of oil offshore and on public lands, our Western state oil shale holds twice the oil as the Mideast. Although Canadian oil counts as “foreign oil,” our neighbor to the north is the Saudi Arabia of oil from tar sands.

There is plenty of oil at home and nearby that we can access to fuel vital economic growth — but the greens won’t let us.

But shouldn’t we conserve our oil resources for future generations?

Well, as Barack Obama might say — that is, if he could break away from the maximum security prison of green-think — “We are the generation that we’ve been waiting for.”

First, if the greens won’t let us use our oil now, why would they in the future? Won’t they always tell people to conserve or to wait for some fantasy alternative fuel or magical car battery?

Next, future generations are very likely to have improved energy technologies that are less or not at all dependent on oil.

Finally, if you think conservation will lead to less oil being used worldwide, think again. China, India and other rapidly developing countries plan to use all the oil they can get. If we don’t buy Canadian tar sands oil, India will buy it to fuel their $2,500 Tata cars.

If we don’t drill off the coast of Florida, others will, like the foreign oil companies working with Cuba.

Despite the self-defeating nature of conservation, both Sens. Obama and McCain are all for it. McCain calls it a “critical national goal.” Obama wants to give incentives for it.

These two ought to remember the sweater-wearing Jimmy Carter and think twice about promoting a national policy of malaise.

Steven Milloy publishes JunkScience.com and DemandDebate.com. He is a junk science expert, advocate of free enterprise and an adjunct scholar at the Competitive Enterprise Institute.

By Steven Milloy
July 10, 2008, FoxNews.com

Texas oilman T. Boone Pickens launched a media blitz this week to announce his plan for us “to escape the grip of foreign oil.” Now he’s got himself stuck between a crock and a wind farm.

Announced via TV commercials, media interviews, a July 9 Wall Street Journal op-ed and a Web site, Pickens wants to substitute wind power for the natural gas used to produce about 22 percent of our electricity and then to substitute natural gas for the conventional gasoline used to power vehicles.

Pickens claims this plan can be accomplished within 10 years, reduce our dependence on foreign oil, reduce the cost of transportation, create thousands of jobs, reduce our carbon footprint and “build a bridge to the future, giving us time to develop new technologies.”

It sounds great and gets even better, according to Pickens. Don’t sweat the cost, he says, “It will be accomplished solely through private investment with no new consumer or corporate taxes or government regulation.” What’s not to like?

First, it’s worth noting Pickens’ claim made in the op-ed that his plan requires no new government regulation. Two sentences later, however, he calls on Congress to “mandate” wind power and its subsidies. Next, Pickens relies on a 2008 Department of Energy study claiming the U.S. could generate 20 percent of its electricity from wind by 2030.

Setting aside the fact that the report was produced in consultation with the wind industry, the 20-by-2030 goal is quite fanciful.

Even if wind technology significantly improves, electrical transmission systems (how electricity gets from the power source to you) are greatly expanded and environmental obstacles (such as environmentalists who protest wind turbines as eyesores and bird-killing machines) can be overcome, the viability of wind power depends on where, when and how strong the wind blows — none of which is predictable.

Wind farm-siting depends on the long-term forecasting of wind patterns, but climate is always changing. When it comes to wind power, it is not simply “build it and the wind will come.” Even the momentary loss of wind can be a problem. As Reuters reported on Feb. 27, “Loss of wind causes Texas power grid emergency.”

The electric grid operator was forced to curtail 1,100 megawatts of power to customers within 10 minutes. Wind isn’t a standalone power source. It needs a Plan B for when the wind “just don’t blow.”

This contrasts with coal- or gas-fired electrical power, which can be produced on demand and as needed. A great benefit of modern technology is that it liberates us from Mother Nature’s harsh whims. Pickens wants to re-enslave us with 12th century technology.

Then there’s the cost of the 20-by-2030 goal — $43 billion more than the cost of non-wind assets, according to the DOE — and this doesn’t include many billions of dollars more for additional transmission lines. Could the 20-by-2030 goal even be accomplished?

According to Electric Utility Week on June 9, a DOE official informed attendees at a June wind industry meeting that reaching the goal would entail replicating the entire existing U.S. wind system (about 17,000 megawatts of capacity constructed over the past decade) every year starting in 2018.

What about Pickens’ plan to shift us into natural gas vehicles? Well, they cost a lot more: an extra $3,000 to $6,000 for cars and $30,000 to $40,000 for buses and trucks. There are only about 1,300 natural gas refueling stations in the U.S., as compared with about 180,000 conventional gas stations — that’s a lot of infrastructure to build and finance. Will Pickens’ plan reduce our dependence on foreign oil? Doubtful.

Even if the fleet of natural gas-powered vehicles is enlarged, the bulk of existing and new vehicles will continue to depend for the foreseeable future on gasoline. Americans own about 260 million vehicles, a total that grows by more than 3 million vehicles every year.

Turnover is low as about 60 percent are owned for more than seven years. Besides, as demand for natural gas increases, so will prices. In the Washington, D.C., area, natural gas is already about two-thirds as costly as gasoline — and that’s with hardly any demand.

None of these facts and circumstances are new to Pickens. So what’s up with him?

Not only does Pickens’ firm, BP capital, have significant investments in natural gas, but last June he announced plans to build the world’s largest wind farm in west Texas, capable of producing 4,000 megawatts of electricity.

The federal government subsidizes wind farm operators with a tax credit worth 1.9 cents per kilowatt hour — potentially making for a tidy annual taxpayer gift to Pickens based on his anticipated capacity. But all is not well in Wind Subsidy-land.

Since Congress didn’t renew the wind subsidy as part of the 2007 energy bill, it will expire at the end of this year unless reauthorized. Subsidies are perhaps more important to the wind industry than wind itself. Without them, wind can’t compete against fossil fuel-generated power.

As pointed out by the Atlanta Journal-Constitution on July 9, “In 1999, 2001 and 2003, when Congress temporarily killed the credits, the number of new turbines dropped dramatically.”

It’s little wonder that Pickens is waging a $58 million PR campaign to promote his plan. If it works, his short-term gain will be saving the tax credit and his wind farm investment.

In the long-term, he stands to line his already overflowing pockets with hard-earned taxpayer dollars. What will the rest of us get from this T. Boone-doggle? That’s anybody’s guess, but it probably won’t be cheaper energy, energy independence or a cleaner environment.

Steven Milloy publishes JunkScience.com and DemandDebate.com. He is a junk science expert, advocate of free enterprise and an adjunct scholar at the Competitive Enterprise Institute.