Review of Pickens on Leno

You can see the video here:

http://www.nbc.com/The_Tonight_Show_with_Jay_Leno/video/episodes/#vid=648021

Skip to the 35:00 mark, that’s when he stops doing his old man impression and gets to the Pickens Plan.

And of course, he started with the $700 billion lie, just like I thought he would. He said that he did the analysis ($700 billion and 70% of consumed oil is foreign) then went with his plan. If the analysis is wrong, which it is, what does that say about his plan?

Then he asserts that we (The US) is paying for both sides of the war, but doesn’t specify which war (Iraq? Afghanistan? On Terror?).

Then he states that the OPEC countries had revenues of $250 billion and now that’s $1.25 trillion. I’ll have to check that out in a bit to see if that’s correct or not.

Then he says “If you want to see where your money is going, go over to the middle east and look at those buildings.” Which contradicts his assertion that oil money is funding terrorism. If oil money is funding terrorism, then it’s not going to building Dubai. I’m pretty sure that terrorists, at least of the fundamentalist Islamic type, do not like Dubai, but they don’t bomb it because they’re Arabs and that would put a pretty big negative on their public opinion. It’s easy to stay popular if you’re attacking a foreigner, it’s less so if you’re attacking someone who looks and speaks like you. But that’s a different story that T. Boone isn’t going try and catch up.

But then he says that he “doesn’t criticize them, but that we’re to blame for the fix we’re in.” Which is a pretty big paradox he sets up. Does he think we’re funding terrorists through the middle east countries we import oil from? Or does he think that there’s nothing wrong with what the Middle East is spending their money on? But you can’t get both ways there.

He then goes into the plan where he says that we have an abundance of natural gas and his usual “it’s cheaper, cleaner and ours” routine he’s done many times before. They get into a little banter about how the US is the Saudi Arabia of natural gas, which is true. He doesn’t mention that there are other countries that have alot more natural gas than we do. What happens when the US runs out of our reserves?

The discussion then turns to municipal bus fleets, and T. Boone uses the opportunity to go after Dallas for considering to run their buses on diesel, about which he says that “clean diesel” is an oxymoron. Jay then compares using diesel like a drug dealer, where they give you the price low and then raise the price later. T. Boone agrees with that analogy.

And again, Pickens is wrong. It’s natural gas that’s historically “cheap”, though rising in cost along with gas. Here’s why. Oil is already been priced high, because we’re already using it as the main transportation fuel. If Dallas is struggling with the decision, already knowing that diesel has already hit the $5 a gallon mark, then what is it going to go from here? However, natural gas is increasing in usage and the price is where it is right now. But what happens in the future (which is what this discussion is all about) is when the Pickens Plan is implemented and everyone switches to natural gas? The price increases much more than diesel, which people switch away from. So it’s actually natural gas that’s like the drug. Which makes Pickens the drug dealer, in this analogy.

He then tops it off with a threat to move to Fort Worth because their fleet runs on natural gas. I’ll believe that when I see it.

Jay then mentions that it’s easy to convert cars to natural gas, though I don’t see anything in a cursory search of the internet that suggests easy (and this isn’t “change the oil” easy, we’re talking “replace the transmission”). 98% of car owners aren’t going to be able to do this themselves, which is more of a sign of the complexity of the situation than anything else.

But then T. Boone has the revealing moment of the interview. He states that “he’s focused on trucks” and gives some statistics on that. What he doesn’t mention that is that the reason he’s interested is because he has a giant financial stake in getting trucks to run on natural gas. He’s on the board of directors of Clean Energy Fuels Corp, a supplier of natural gas to fleet vehicles (trucks). If he can get his plan to focus on trucks, then his company can see a large increase in demand for his services.

And lo and behold, he’s mentioned countless times that he wants the federal government to FORCE fleet vehicles to run on natural gas. In fact, at the 38:41 mark, he almost lets this cat out of the bag. He says:

I want those trucks. And I want the government, and I want the administration coming in to—you know, I started this on July the 8th.

See, he almost said what he wanted to do was force companies to use natural gas. I’m sure it’s just a coincidence that servicing fleet vehicles is EXACTLY what his company does. No politicking there at all, no financial benefit to him personally. Nope, not at all.

They wrap up by Jay mentioning that it’s about a $1.50 a gallon to fill up natural gas. This might be true… if you live in Utah or Oklahoma. (It’s no coincidence that these are two major producing areas in the US). Otherwise, you’re seeing above $2 per unit.

And he ends up with a prediction of $200-300 a barrel of oil if we continue with our current consumption. Considering that we haven’t even reached his prediction of $150 a barrel that he said we’d reach this summer, I’d take this with a bit of a grain of salt.

He also never got around to covering the wind part of his plan, but that part also has as many holes in it as his natural gas plan. So it’s probably best not to take up more time, but he did run long on the natural gas part.

So overall, he used his folksy style to cover up a bunch of lies and self-interest for the show. And the worse part is that he probably wasn’t very entertaining to boot. But we’ll see if his book promotion tour brings up any interest in his plan or not.

National Party Platforms on Transportation and Energy – Green Party

I have to give credit where credit is due: the Green Party is very, very open about what they want to do. Sure it’ll involve massive government intervention in everyone’s daily life, but they’re putting it out there in very specific terms.

The entire platform (including changes from 2004 to 2008) on energy and transportation policy, which they call “Ecological Sustainability” is available from the GP website. Unlike the Libertarian Party, the Greens are very specific about what they would like to do.

So lets see what they have on energy:

• “Our oil and gas addiction in particular has led to wars and human rights abuses in many countries….U.S. dependence on oil and gas has driven an unparalleled assault on the global environment and on human rights in many nations.” Of course, if we were to not use oil or natural gas anymore, these third world countries would be liberal democracies with no disputes or conflict whatsoever. This, of course, confuses the fact that the countries themselves start these wars. There are plenty of countries that have petroleum resources that don’t abuse their citizens (e.g. Canada), and there are countries that DON’T have oil resources and DO abuse their citizens (e.g. Zimbabwe). Removing the oil would not remove the source of these problems (the backwards societies and the lack of governing structure)
• “We oppose energy utility deregulation…. We recognize that deregulation and its reliance on markets – as opposed to state-based regulations – is incapable of providing affordable, reliable and clean energy…. We support state efforts to regain control over electricity by establishing democratic, public control systems to locally coordinate supply and demand and by eliminating energy trading.” It’s funny how people have no idea how economics (and socialism) work. PUCs are NOT democratic by any stretch of the imagination, and the current market system somehow does enable people to have affordable and reliable energy, and if you’re in a fully deregulated market like Texas, you can have clean energy too. If you’re in California or most other states, you have no choice in where you get your electricity and it’s “cleanliness”. But the Greens see markets as bad, no matter if they actually enable clean energy or not.
• “New construction should be required to achieve substantial portions of its heating energy from the sun.” Man, I’d hate to live in the Pacific Northwest under the Greens.
• “We oppose further oil and gas drilling or exploration – especially that which would occur in other countries, (emphasis mine)” I’d LOVE to see how they’d enforce banning oil exploration in other countries. This further enforces the general criticism of the enviros as wanting to keep the poor countries poor.
• “We call for independent, public-access radiation monitoring at all nuclear facilities.” If you want to do this, do this. Go to your nearest nuclear power plant, set up shop with a Geiger counter, and report your results. I’m not going to stop you and if the government does, then THAT’s your problem. But you don’t need the government to do this for you.

And their section on transportation:

• “We call for major public investment in mass transportation, so that such systems are cheap or free to the public and are safe, accessible, and easily understandable to first-time users. ” hahaha Short of spending TRILLIONS on mass transit, you’re never going to get all three… and since we’re talking about the government running this system, you’re NEVER going to get anything that’s easily understandable. No matter how much you spend.
• “The present-day approach of upgrading streets to accommodate increased traffic generates new traffic because access is now easier, and people will now take jobs further from their homes or purchase homes further from their jobs. Some people shift from public transit to private cars due to the trip time in cars being shorter. As patronage for public transit decreases, public transit loses funding, becomes less viable, and service deteriorates thus encouraging even more people to use their cars. ” This is the best part, the Greens admit that people don’t like taking transit, admit that private transport is faster, and that public transit wouldn’t work without massive subsidies. So, their solution is to make people do something they would prefer not to do in the first place. A winning political strategy.
• “Redirect resources that currently go to enhancing auto capacity into expanding human-scale transit options….Develop affordable mass transit systems that are more economical to use than private vehicles. ” What the hell is a human-scale transit option? And I’d love to see the day when a public mass transit system is more economical to use than a private system. That’s also the day communism will finally work. And pigs will fly.
• “Emphasize the use of light and heavy rail for freight transportation. ” WHY? It’s slower, it has a lot more delays and is constrained in where and how it can go. An airplane or truck can bypass congestion. A train can’t. Just ask anyone who’s taken Amtrak. Speaking of which…
• “Expand our country’s network of rail lines, including high-speed regional passenger service.” Because outside of the Northeast, there is not a single place that is built in a similar way to that region. So you’d be trying to shoehorn a system that works (barely) in one region, where it’s not needed elsewhere. And as most people who take Amtrak can attest to, Amtrak is beset by delays and general incompetence.
• “Ban flights between cities where land-based travel options can get a passenger to their destination within four hours.” Since you have the Acela, all of the Northeast just lost their air service… sorry. Not to mention the whole hub-and-spoke system for the airline industry. So for example, I live in Columbia, SC. Since nobody in their right minds wants to travel to Columbia, there are not many direct flights, so you have to have connections in many cities. Thus, you have alot of flights from Columbia to Atlanta (4 hours away) and Charlotte (1 hour away). Congrats, you no longer can fly that route. So this will either:
  1. Force people to drive up to 4 hours to get to the airport
  2. Force airlines to have you connect from somewhere MORE THAN 4 hours away.

  Either way, you’ve just made the whole air travel system ALOT more complicated and wasteful. But environmentalists are pretty ignorant when it comes to the law of unintended consequences. And to put a cherry on top of their economic backwardness…

• “We encourage the social ownership and use of land at the community, local, and regional level.” The Greens have never studied or heard about the Tragedy of the Commons.

So overall, the Greens have set out an expansive list of things they want to do, which is ballsier than most political parties. Of course, given that most of what they want to do would be economically wasteful at best, it’s not a very smart plan either.

National Party Platforms on Transportation and Energy – Libertarian Party

In a multi-part series, I am going to find and post the party platforms for all of the national political parties, concerning transportation and energy. Today I’ll start with the Libertarian Party.

2008 Platform

Nothing on transportation. On energy, they have this to say:

2.3 Energy and Resources

While energy is needed to fuel a modern society, government should not be subsidizing any particular form of energy. We oppose all government control of energy pricing, allocation, and production.

Short and to the point. But this has it’s good points and its bad. You can boil down the Libertarian platform to “free markets good, government intervention bad”. Which is pretty much what they did this year. Even to the point, that they don’t even have a stated position on transportation.

Of course, it isn’t to say that they’ve never had a position on transportation. They even had a position on public utilities once upon a time. That’s something only a policy wonk would love, but framed the right way, the Libertarians could even put this in a winning message:

“You know why you pay $80 a month for 200 cable channels you don’t watch. Government policies don’t allow you to pick and choose the channels you want to watch, even though the technology is available. You can choose an individual plan for your cell phone, but the government forces everyone to have a one-size fits all plan for cable. It’s time to take cable out of the hands of bureaucrats and lobbyists and back where it belongs, the customer.”

So as an idea of where Libertarians stand on more complex issues, below is the 2004 Libertarian Party platform on some key issues.

Laws of Economics Still Work

Crude oil settled down at $128.73 today, completing a $14 fall over the past three days.

There are some out there who say this is because of George Bush’s announcement dropping the ban on oil exploration and development on the outer continental shelf. And by some, I mean noted political hack, Larry Kudlow.

One of the biggest problems with analysis out there is that everyone ignores the first rule of statistics: correlation does not mean causation. Just because A went up at the same time B went down, doesn’t mean that A caused B to go down. They could be completely unrelated items. Most medical “studies” do exactly this.

Saying that Bush caused oil markets to go down completely ignores other much more pertinent information. Such as demand dropping, more information coming available that was the opposite of what those evil speculators were betting including increased supply and oil imports, not to mention a strengthening dollar.

Note that in not one of those stories was the Bush did anything mentioned. In fact, all of those things happened independently of some inconsequential announcement that the President made. In fact, as long as the law on the books says that no new areas are open to exploration, then the price shouldn’t change one penny.

(Note: the fact that the President can make law is pretty much unconstitutional. If Congress repealed the ban and the President still had the executive order, then I’m pretty sure that the presidential order would be unconstitutional).

So the lesson to take out of all this is that, the markets still work, and the laws of supply and demand say nothing about what the role of a president at all.