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T. Boone Pickens: Contra-Capitalist (a ‘man of system’ sought more fame and fortune)

By Robert Bradley Jr. -- January 31, 2018

“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.

“To put it plainly, T. Boone Pickens is out to save America.”

– Carl Pope (Sierra Club). Quoted in Dean Calbreath, “Pickens Pitches Plans to Shift U.S. Away From Oil,” San Diego Union Tribune, June 25, 2008.

They are not against capitalism. They can be very charismatic, in the know, and mainstream. They may be industry leaders. They are always politically correct and receive good press. And they can, often do, pledge allegiance in the abstract to the American way of free enterprise.

But by their actions, these businessman undermine the fair-field-and-no-favor, consumer-first, taxpayer-neutral precepts of real free-market capitalism. And their actions encourage cronyism by competitors and influence the public toward a skewed view of the classical liberal business ideal.

They are the contra-capitalists, routinely engaging in not only rent-seeking but also hyperbole, half-truths, and imprudence.

The oil and gas industry has been populated by notable contra-capitalists: Enron’s Ken Lay, BP’s John Browne, Duke Energy’s James E. Rogers, Chesapeake’s Aubrey McClendon, and GE’s Jeff Immelt. Ditto for Elon Musk and just about every wind power and solar executive in America (and abroad).

Each of these individuals may have innovated notably and nobly at times, but each practiced and legitimized political capitalism  in the field of energy. They were the “bootleggers” of the Bootleggers and Baptists phenomenon.

This post focuses on the contra-capitalism of another impatient, publicity hungry, market-arrogant energy executive whose retirement has been in the news: T. Boone Pickens.

For the last decade, Pickens promoted government-directed energy plans for America–and put tens of millions of dollars of his own money into propagating his interventionist schemes. Pickens’s starter-war on fossil fuels led the then-head of the Sierra Club, Carl Pope, to declare that T. Boone was out to “save America.”

Energy Plan #1 (2008)

The original Pickens Plan was a government-incentivized substitution between energies to reduce American dependence on oil imports.

A $1 trillion investment in industrial wind turbines was intended to free natural gas from power generation so that it could be used to fuel trucks and other heavy vehicles. Pickens, not coincidentally, was invested in compressed natural gas for vehicles and wanted to invest heavily in wind turbines in the Texas Panhandle.

Peak Oil was the talk of the industry. Net oil Imports were more than half of US consumption. Even George W. Bush, in his 2006 State of the Union address, declared that “America is addicted to oil.”

The big loser would be oil–and consumers all around the block.

Less than two years later, Pickens gave up on his grand plan of building the world’s largest wind farm.

Energy Plan #2 (2011)

Pickens Plan II, a scaled back version of Pickens Plan I (without the wind turbines), would still benefit Pickens’s own Clean Energy Fuels Corp. The key component was legislation for the federal government to offer a $65,000 tax credit to convert 18-wheelers from diesel to natural gas. The program would cost $62 million, a way-station to more government incentives to move the eight-million heavy duty truck market to compressed natural gas.

The New Alternative Transportation to Give Americans Solutions Act of 2011 (Nat Gas Act) would not reach a vote.

Energy Plan #3 (2013)

Pickens Plan III, as outlined in a Politico editorial, proposed 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. The changeover would be in the sweet spot of Pickens’s own Clean Energy Fuels Corporation.  What’s good for Boone is good for America, right?

Conclusion

Pickens’s cronyism gave capitalism a bad name. It was part of his animus against Big Oil.

And what was it all for?

Net oil imports, which were 57 percent of US consumption in 2008, fell to 24 percent in 2016. And 2017 is expected to come in at under 20 percent, the lowest percentage since the mid-1960s.

T. Boone Pickens’s energy-plan crusade: What a waste of money and talent.

——————-

Appendix: MasterResource posts on T. Boone Pickens

T. Boone Pickens: Still More from the ‘Man of System” (Michael Lynch: May 18, 2015)

The ‘New’ Confusion About Planning: T. Boone Pickens and Energy Public Policy (Robert Bradley: May 15, 2013)

Pickens Plan III: More Retreat but Still Errant (SPR oil for nat gas) Robert Bradley: May 14, 2013)

Wisdom from T. Boone against Rent-Seeking Pickens (remember when you said ….?)” (Robert Bradley: May 27, 2011)

Pickens Plan II: Retreat as Prelude to Failure? (worth reading Sunday)” (Robert Bradley: March 29, 2009)

Governor Rick Perry (R-TX), T. Boone Pickens, and the Enron Legacy of Windpower” (Robert Bradley: March 24, 2009)

Pickens Plan II’s Natural Gas Trucks: Mel Brooks Meets Energy Policy” (Donald Hertzmark: March 9, 2009)

The Strange Case of T. Boone Pickens” (Robert Bradley: February 9, 2009)

Hard Questions for T. Boone Pickens” (Mary Hutzler: January 5, 2009)

And a review of Pickens’s autobiography, The First Billion is the Hardest (Crown Business: 2008): “When Effort Is Energetic.” Wall Street Journal (Robert Bradley: September 10, 2008).

 

5 Comments


  1. John Garrett  

    Boone was frequently wrong— but never in doubt.

    His actual investment performance was far less impressive than what was promoted. Among other disasters, he wrecked Mesa Petroleum. Its shareholders were essentially wiped out. Boone? Not so much.

    Reply

  2. Mark  

    Sounds to me like how utilities operate too.

    Per Donald Santa (during his tenure as a FERC Commissioner): “The line has to be drawn when the utility’s plan for what it calls ‘competition’ perpetuates the monopoly powers that can be used to thwart true competition.”

    Reply

  3. Some Links - Cafe Hayek  

    […] Rob Bradley describes T. Boone Pickens as a “contra-capitalist.” […]

    Reply

  4. Michael Lynch  

    Good piece. It is always worth remembering that corporations are frequently not out for capitalism, but for themselves (how dare they!) and that outsiders like Carl Pope often do not do due diligence before supporting initiatives.

    Reply

  5. Contra-Capitalism as Business Strategy - Master Resource  

    […] a previous post in which I identified T. Boone Pickens as a contra-capitalist, I describe the general modus operandi as […]

    Reply

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