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Category — Pickens, T. Boone

The ‘New’ Confusion About Planning: T. Boone Pickens and Energy Public Policy

“[A]s my father liked to tell me, ‘Son, a fool with a plan can beat a genius with no plan any day.’ Right now, when it comes to America and our effort to achieve greater energy security, we’re a foolish nation without a plan.

If it were up to me, America’s energy plan would have ….”

- T. Boone Pickens, Leadership Absent on Energy Plan,” Omaha World-Herald, May 1, 2013.

“The curious task of economics is to demonstrate to men how little they really know about what they imagine the can design.”

- F. A. Hayek, The Fatal Conceit: The Errors of Socialism (1988), p. 76.

T. Boone Pickens, the author and marketer of three national energy plans (see yesterday’s post), is a “man of system,” to use Adam Smith’s phrase from the mid-18th century.

Pickens’s grandiose scheme to use the powers of government to implement wind-for-natural-gas in  electrical generation and natural-gas-for-oil in transportation (Pickens I) inspired Carl Pope, then head of the Sierra Club, to state back in 2008: “To put it plainly, T. Boone Pickens is out to save America.” [1] Plans II and III dropped wind (when business Boone did) to just push natural gas in the transportation market.

To plan or not plan–that is the wrong question in the realm of human action. Purposeful human action is planning. A central plan enforced by government (which by definition has a legal monopoly on the initiation of force) precludes planning on the individual and group level done by voluntary means.

Thus T. Boone Pickens has fundamentally misconstrued the question of planning which is who will plan: the market through private property, voluntary exchange, and the rule of law or government through its “experts” and legal monopoly on coercion.

Early Warming: Adam Smith [

May 15, 2013   3 Comments

Pickens Plan III: More Retreat but Still Errant (SPR oil for nat gas)

When it comes to energy, T. Boone Pickens esteems government planning. When asked about President Obama’s recent proposal for an Energy Security Trust, Pickens responded:

That starts to talk about a plan. He’s going to fund something to start something…. Make a plan … and do something different.

And low and behold, Pickens is crusading with yet another energy plan, his third in the last six years. As before, his animus is against Big Oil (see Appendix) and his fondness for personal dollars.

Pickens Plan III proposes that the federal government sell oil from the Strategic Petroleum Reserve (SPR) to jump-start the costly transition from oil to natural gas to fuel transportation. We don’t know the details yet, but T. Boone in March began pushing his new plan in the national media and local press.

Pending a legislative proposal with the specifics, two points can be made. First, the federal government should not be in the business of picking fossil-fuel winners. Second, the idea of selling federal oil should be elevated to a national debate to privatize the SPR to both reduce the federal budget and demote Washington from the day-to-day energy market. [Read more →]

May 14, 2013   1 Comment

Wisdom from T. Boone against Rent-Seeking Pickens (remember when you said ….?)

“The two greatest enemies of free enterprise in the United States … have been, on the one hand, my fellow intellectuals and, on the other hand, the business corporations of this country.”

- Milton Friedman. “Which Way for Capitalism?” Reason, May 1977, p. 21.

Special government favor. A little something for nothing at the other’s expense…. Sure, a particular business or industry can gain in the short run. But when everyone is getting the booty, almost all lose.

Just look where government is today. The chronic, gargantuan federal budget deficit is testament to the Enrons then, GEs now  receiving government subsidies from either the U.S. Treasury or the tax code. The rest of us pay (or will pay) what the rent-seekers are getting and not paying for (outside of their lobbying costs).

Business has been a force for regulation. In the twentieth century, the energy industry was behind the large majority of major government intervention with oil, natural gas, and coal. As I concluded in Oil, Gas, and Government: The U.S. Experience:

As a rule, the free market was the “default” situation into which government intervention was introduced to achieve business objectives. In the great majority of cases, identifiable industry coalitions led the way. The history of regulation of the oil and gas industry is the story of how compromise and pragmatism, in the absence of principle, created interventionist pressure at every turn. When it was costless, the industry proclaimed its support for the free market in principle. But this philosophical leaning meant little when more was at stake. (1)

The same is true with electricity, a story that my forthcoming book, Edison to Enron: Energy Markets and Political Strategies, will detail through the rise and fall of the father of the modern power industry, Samuel Insull.

And so it is with 21th-century energy interventionism. Whether Enron saving the domestic wind industry or Pickens trying to politically wedge natural gas in the transportation market by T. Boone Pickens, political capitalists are expanding the government side of the mixed economy.

T. Boone Pickens circa 1987, 2000

Guess what? The pre-Pickens Plan T. Boone gave ample warning against the very behavior that characterizes him today.

If I were a congressman questioning Pickens under oath, I would read him the following quotations and ask him for comment–and then get to the sour economics of whatever he is pushing for the government to push on consumers.

Four quotations (with references) follow: [

May 27, 2011   6 Comments

Natural Gas a Natural Winner? Let the (Transportation) Market Decide!

Four-dollar per gallon gasoline provides more margin for oil producers than four dollars per million British thermal units (MMBtu) provides for natural gas producers. Historically speaking, oil prices are high and natural gas prices low.

In the face of low prices, the natural gas industry can practice self-help in a free market–or resort to political shenanigans. Self-help means producing less (hard to do in a technology boom!) or selling more. Whether converting fuel oil customers to natural gas in the home heating market or building gas-to-liquids plants to convert natural gas into petroleum products, including gasoline, natural gas companies and their trade groups can work to be their own best friend.

But segments of the natural gas industry, led by master rent-seeker T. Boone Pickens, has turned to the political means to bolster demand and thus price. After all, if wind, solar, and biomass can get special government favor (a favorable regulation or special tax-code provision), why not natural gas?  And enigmatic T. Boone‘s large ownership interest in natural gas refueling stations would just happen (sshhhh!) to win big from his political activism.

Specifically, Pickens is fronting and bankrolling legislation to provide a generous government subsidy for converting transportation vehicles from petroleum (gasoline or diesel) to natural gas. Too bad if there is not a national refueling infrastructure . . . too bad if the natural gas tanks are heavier and take up more space than a gasoline tank . . . and too bad if the extra engine expense doesn’t work despite natural gas’s lower relative cost per BTU.

What is the Subsidy?

A Wall Street Journal article, “Natural-Gas Trucks Face Long Haul,” went over the sour economics of natural-gas-driven 18-wheelers.

As veteran energy writer Jeffrey Ball explains, the extra cost for a dedicated natural gas vehicle differs from a low of around $10,000 (+5 percent) for a trash truck to a high of $100,000 (+105 percent) for a long-haul cab truck. United Parcel ordered 48 natural gas cabs–but only by applying $4 million of Obama stimulus money. So taxpayers paid about $83,300 (83 percent) of the premium. [Read more →]

May 24, 2011   6 Comments

Pickens Plan II: Retreat as Prelude to Failure? (worth reading Sunday)

Several MasterResource posts on the problems of the original Pickens Plan, and the retreat to Pickens Plan II, are worth revisiting as T. Boone continues his multi-million-dollar quest for a government-engineered energy makeover.

Pickens, like Al Gore, does not want to debate his plan–he just wants to implement it with edicts. But fundamental problems remain with Pickens I and the scaled-back Pickens II. Here is a one-two-three punch by critics: [Read more →]

March 29, 2009   No Comments

Governor Rick Perry (R-TX), T. Boone Pickens, and the Enron Legacy of Windpower

Last December, Texas governor Rick Perry, speaking at a Houston fundraiser, sadly noted how President George W. Bush had lost his way in Washington, D.C. His good friend had compromised his principles and left the nation in a lurch, however unintentionally.

But then the governor launched into his Texas-is-great stump speech that included kudos to windpower, a new large industry (no) thanks to a legislative mandate requiring that Texas electricity retailers purchase qualifying renewable energy. (Wind is the most economical of the qualifiers.) The 1999 mandate, enacted with the crucial help of Enron lobbyists, was increased in 2002 with a powerful wind lobby at work. And so at  the point of a gun, Texas became the leading windpower state in the country, passing California along the way.

So it was not surprising that last Saturday night Gov. Perry handed T. Boone Pickens the 2009 Texan of the Year Award at a ceremony in New Braunfels, a town of 50,000 in the Texas Hill Country. [Read more →]

March 24, 2009   12 Comments

Pickens Plan II’s Natural Gas Trucks: Mel Brooks Meets Energy Policy

Mel Brooks, in his classic comedy The Producers, schemed to make money by over-subscribing shares in a sure-to-fail play. Unfortunately for his character, the play became a smash hit, and all the investors wanted their payouts. Since he had sold well over 100% of the interest in the play, he was in a bit of a pickle.

And so it is with natural gas. Clean, easy to use, abundant—natural gas is everyone’s choice for our energy transition away from oil and coal for power generation, industry, homes, and now transportation. Enter oilman-turned-wind-promoter T. Boone Pickens, with a proposal to move U.S. heavy trucks strongly toward natural gas fuel (as compressed natural gas, or CNG). And to enable the offset, the electricity that is currently generated by such gas (about a 21% market share of power generation, according to the Energy Information Administration’s Annuel Energy Outlook 2009, Table 8) would be supplied by new wind farms, built mostly in the Plains States.[1]

The argument is based on simple physical resource reallocation. [Read more →]

March 9, 2009   11 Comments

ExxonMobil's Tillerson on Renewable Energy: Realism amid Politics

As reported by Russell Gold at Environmental Capital, ExxonMobil CEO Rex Tillerson has made an incisive new argument against his company’s investing in government-dependent renewable energy.

“If I wanted to kill [tax subsidies], the thing to do is for Exxon Mobil to go and invest heavily in them and then Congress would immediately cancel the tax subsidy. Actually what they would do is they would just cancel it for us,” said Mr.Tillerson, during the annual analyst meeting at the New York Stock Exchange.

He added: “In reality, that is what I fear would happen. So we are not going to go into investments that are dependent on a government providing a tax system to make them viable.”

This is very interesting. Former ExxonMobil CEO Lee Raymond and now Tillerson have argued against investing in politically dependent renewables because they have been-there-done-that, with investor losses in the 1970s. And looking at the present and future technology of wind and solar relative to what ExxonMobil can realistically add, they are not sanguine about going forward in the same area.

But Tillerson is now saying something new: [

March 7, 2009   11 Comments

The Strange Case of T. Boone Pickens

Rep. Edward Markey (D-MA) spoke here in Houston today at a conference sponsored by the Cambridge Energy Research Associates (hosted by CERA chairman Daniel Yergin). Trying to defuse controversy (he is addressing an industry that he dislikes), Markey told the Houston Chronicle: “The headline should be: ‘I agree with T. Boone Pickens’.” [Read more →]

February 9, 2009   3 Comments

Hard Questions for T. Boone Pickens

T. Boone Pickens is holding a town hall meeting on the Pickens Plan tomorrow at Rice University. His presentation, hosted by the James A. Baker III Institute for Public Policy, deserves some hard questions and frank answers. Here are some suggested questions. [Read more →]

January 5, 2009   9 Comments