Tuesday, August 05, 2008

Puttin' the Boone (Pickens) in Boondoggle

A three-part analysis of the "Pickensplan" by Steven Milloy:

The Wind Cries 'Bailout!'

July 10, 2008

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 Wall Street Journal op-ed (July 9) and a web site, Pickens wants to substitute wind power for the natural gas currently used to produce about 22 percent of our electricity and then to substitute natural gas for the conventional gasoline currently 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 new jobs, reduce our carbon footprint, and "build a bridge to the future, giving is 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 (like 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 are 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. ...

... 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 currently 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 that wind itself. Without them, wind can't compete against fossil fuel-generated power. As pointed out by the Atlanta Journal-Constitution (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.

Is T. Boone Pickens 'Swiftboating' America?

July 24, 2008

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.

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. ...

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" ...

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. ...

Machinations

July 31, 2008

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?" ...

wind power, wind energy, environment, environmentalism