As T. Boone Pickens in the Wall Street Journal described hismaster plan for solving an aspect of the US energy crisis:dependence on foreign oil. At its core, this solution wasreally only a swap of foreign energy sources from oil tonatural gas.
In his article , Boone has this to say about the plan: "Myplan calls for taking the energy generated by wind and using itto replace a significant percentage of the natural gas that isnow being used to fuel our power plants. Today, natural gasaccounts for about 22% of our electricity generation in theU.S. We can use new wind capacity to free up the natural gasfor use as a transportation fuel."
"That would displace more than one-third of our foreign oilimports. Natural gas is the only domestic energy of size thatcan be used to replace oil used for transportation, and it isabundant in the U.S. It is cheap and it is clean. With eightmillion natural-gas-powered vehicles on the road world-wide,the technology already exists to rapidly build out fleets oftrucks, buses and even cars using natural gas as a fuel. Ofthese eight million vehicles, the U.S. has a paltry 150,000right now. We can and should do so much more to build our fleetof natural-gas-powered vehicles."
At the time, CNBC's Phil LeBeau aptly pointed out that thereare only 1,000 cars on the road (mainly in CA) that use naturalgas and it's unlikely the auto industry would commit tobuilding more. There just isn't the infrastructure to servicethe cars nor to fuel them on the road nor do they have range ofcurrent cars. Three strikes you're out.
More importantly, there is the law of unintendedconsequences for natural gas. With a shift in demand to naturalgas away from oil, the price of natural gas isn't going to sitstill. It's currently $12.30 and it's going to move up. Howhigh, I'm not sure but it would certainly increase the cost ofsuch a plan. Most importantly, it could significantly increasethe cost of something else: food. Natural gas is a majorcomponent of making fertilizer. Even in the short run,potential higher food costs alone would derail such a plan.
However, Boone's plan is a major positive step forward inthe discussion about energy in the US. His ideas about winddeserve serious consideration albeit with a subsidy. As amatter of fact,the windindustry is currently asking for a renewal of the tax subsidynow. (Was this Boone's way of pushing theprocess?) Also, Texas just embarked upon a multi-billion dollarprogram for new wind capacity to generate electricity for 3.7million homes. The state is now known as a "wind-rich" statewhich refers to energy not politicians.
The more intriguing question is when will Congress/Presidentcreate a unified energy policy? This is why people with visionare so critical for the country: they recognize a major problemand they offer a SOLUTION! Boone's plan is an intriguing pieceof the energy puzzle.
Remember, this isn't just about what we can do now for theprice of gasoline or energy. If this was the only criteria, wewould only engage in short term policy changes that have shortterm impacts like opening up the strategic petroleumreserve.
We need longer term plans to solve the longer term energyproblems of United States. In case you aren't familiar with howmarkets react, a coherent, logical plan of action towardsproviding long term solutions will have a positive impact nowon the price of energy. Why? Because it will shift the shortterm psychology of the market away from doom and gloom towardsa light at the end of the tunnel scenario.
We only need to look at President Bush's lifting of themoratorium on off-shore drilling to see an example of this inthe markets. Did this act significantly change the short termoutlook for oil? No, but it changed the discussion on thesubject at a time when it was needed. In turn, this aided theshift in market psychology back to some fundamentals likedemand.....which is dropping.
This is why it is critical that no long term idea getdiscouraged or disparaged by anyone (Congress, Presidentialhopefuls, or press) when it comes to solving the nations energyproblems. A long term idea can be the short term solution.