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.

John McCain Uses the Pickens Lie

From John McCain’s acceptance speech last night:

My fellow Americans, when I’m President, we’re going to embark on the most ambitious national project in decades. We are going to stop sending $700 billion a year to countries that don’t like us very much. We will attack the problem on every front. We will produce more energy at home. We will drill new wells offshore, and we’ll drill them now. We will build more nuclear power plants. We will develop clean coal technology. We will increase the use of wind, tide, solar and natural gas. We will encourage the development and use of flex fuel, hybrid and electric automobiles. (Emphasis added)

I’ve documented the fact that $700 billion is a bald-faced, economically illiterate number that was conjured up by T. Boone that has no basis on the realities of the oil market or just plain facts. Add to the fact that McCain just lumped natural gas in with solar and wind (“one of these things is not like the other, one of these things is just not the same”), and T. Boone must have been jumping for joy with the speech last night. I’m sure one of the first things McCain will reach across the aisle to Nancy Pelosi is to force private fleet vehicles to run on natural gas.

So if you oppose the Pickens Plan, or don’t like the fact that it’s based on sketchy numbers, has a significant chance of screwing up our electricity market and backed by someone who has a huge financial stake in it, then you don’t have a choice in the election. Well you do, but you won’t hear about it in the media.

I would call on John McCain’s campaign to fully disclose their relationship with T. Boone and fess up to the fact that he cited a horribly incorrect number during a nationally televised speech. It’s the least that he can do “for the country.” But I doubt that will happen.

Sarah Palin on Larry Kudlow

Yes, I know it’s Larry Kudlow, so I apologize for that. But just skip to the 3:35 mark, which is where Palin’s populism comes out in droves. “The oil and gas resources that the Alaskan people own?” “We have to make sure that an appropriate value is placed on these resources and that the people who own these resources are able to benefit from them.” I’m sorry, but why does “the people own these resources?” That sounds pretty Venezuelan to me, which is NOT very conservative. She also avoids the deregulation question, but that’s because the blowhard Kudlow asked a 30 second question about three different things.

New Graphic – Natural Gas Ain’t All Domestic

From my Photoshop to your desktop:

Pickens Wrong on Natural Gas Too

As usual, the information in the graphic comes from the Energy Information Agency, using 10 minutes of my time to get the data that T. Boone Pickens chooses to ignore.

Liveblog of T. Boone Pickens interview with Sean Hannity

I heard on the way home that Sean Hannity was interview T. Boone Pickens on the Pickens Plan. Since I was in the car, I couldn’t post directly to the internet, so I had to write it down and copy it now. As Pickens is a Republican supporter (he sponsored the Swift Boat Veterans for Truth), I can now look in hindsight that Hannity would throw softballs at Pickens. But I was expecting at least some questions that were more critical than were asked.

You can read the liveblog after the cut…

Critique of the Pickens Plan – Part 3 – (Death of the Road Trip?)

Both the Pickens Plan and the various ideas for creating electric cars have a drawback that I’ve seen few people make notice about.

The lack of range for both natural gas and electric vehicles.

For pure electric vehicles, the current available range is about 50 miles. There’s talk of getting up to 120 miles with future technology.

Natural gas cars right now have a range of about 220-180 miles, depending on who you ask.

Compare this to current technology: gasoline automobiles can generally get about 400 miles per tank, which depends on the vehicle, but that a general range for most cars I’ve seen. Some get more, some get less, but an average of 400 seems about right.

Now, for most people who have taken road trips, it can be a pain in the rear to find gas and fill up. Alot of the time, you end up paying more because you’re not familiar with the area, so you end up buying at a station that may not be the cheapest. There’s also the situation where you end up needing to get gas, and then miss the station down the road that’s a couple of cents cheaper. But if you only need to fuel once, or not at all, then you don’t have these problems to begin with. Plus, there’s the delay of having to stop driving, get out, fuel, then get going again. It’s a hassle.

So a longer range means less of these problems. But that seems to be the last issue on the minds of car developers and those who want to prop up alternative fuels right now. Electric car people tend to focus on commuters. Which is fine, if commuting was the only thing that people did with their cars.

It’s not.

The same problem goes with natural gas. From a link provided by the Pickens Plan:

* Second drawback: since natural gas is a compressed fuel, the tank takes up some trunk space, and only holds the equivalent of 8 gallons of gasoline. Honda estimates the vehicle’s range to be 220 to 250 miles, although Consumer Reports claimed it was closer to 180 miles.

NGV enthusiasts are getting around range limitations (and vehicle scarcity) by converting their own vehicles to run on natural gas and adding spare tank capacity. Throwing extra tanks in the bed of a truck, for example, can boost driving range to around 600 miles. The best part about converting a vehicle (as opposed to the Civic GX) is that if you run out of CNG, the system automatically switches back to gasoline.

– Gas 2.0

Throwing extra tanks in is fine if you’re by yourself and you have room to spare in your trunk. But vacationers don’t have that liberty, especially if they have children. Which means they’ll need bigger cars (oh no, SUVs!) or fill up more frequently.

Finally, there’s the problem of filling up. Now, there is the option of refueling at home for both electricity and natural gas. But what about on the road? Especially in rural areas, there seems to be a dearth of natural gas and electric refueling stations. Now, there’s also a dearth of gas stations in rural areas too, but I’m even talking along highways. You’re going to need alot more stations if the fuel doesn’t get enough range.

And what happens if you run out of gas. Like I mentioned before, there’s the problem of bringing gas out to someone who’s stranded. But what about LNG or electricity. Maybe you can find a house where you can plug your car in, but you’d need a pretty long extension cord. Or maybe drain from someone else’s car, but LNG is a bit more problematic than that.

Nevermind that alot of the cars proposed are compact/sub-compact. Again, a problem for families or people who are of larger than average size. I would like to see what the results for a full-size/truck/SUV are before I can say that electric/natural gas vehicles will have mainstream appeal. And without mainstream appeal, we’re just talking in hypothesis.

It seems to me that alot of the focus on travel seems to be withing larger urban and suburban areas and commuters specifically. Which is fine, except that it neglects a significant aspect of driving for many people. The idea of going somewhere other than work. That something that all proponents of alt fuels will need to grasp and pay attention to as well.

Critique of the Pickens Plan – Part 2 (Transportation)

In Part 1, I looked at how the Pickens Plan has problems in his goal of converting natural gas electricity generation to wind and solar powered generation.  In this part, I’m going to look at the second half of his plan: using natural gas as a power source for transportation in the US to reduce reliability on foreign oil.

I have three issues with using natural gas as a fuel in transportation: economical, political and technological.

1. Political ProblemsWhile most people complain about gas prices quite heavily, the retail gasoline market is probably of the few markets today that fit the definition of a Competive Market. Illustrating this point is the fact that most retailers of gasoline make a very small profit on each gallon of gasoline, which is what economic theory would predict for a competitive market. So much that ExxonMobil doesn’t want to have anything to do with it anymore.

   So what problem do I have moving to natural gas distribution? We’re moving from a competitive market with lots of choices to a market with lots of monopolies and run at almost every part of the supply chain by government bureaucrats. Let me explain. Natural gas is lot like electricity where one company has dominion over a certain territory and controls all of the sales in the area. There are certain areas where you can choose whom you get the physical gas from but not who delivers it. That is controlled by the government. Contrast this with gasoline, where no one company has dominion over a territory (by anti-trust law) and there are many players in each market, from national brands to mom and pop stores selling generics.

   While government has involvement in the composition and selling of gas, it has very little say in the pricing of gas. This is not the case for natural gas, where local companies have their prices SET by the government. (This doesn’t apply to states that have open-choice markets, see a list here). So there would be further government involvement in the use and consumption of transportation fuel, with completely new territory of regulating the PRICE of these fuels. This will not be a positive transition for those who believe in limited government. Those who think consumers are getting shafted will welcome the change, no matter what the consequences (shortages mostly).

2. Technological Problems

   While using natural gas for propulsion is alot further along than, let say electricity, there’s still mostly infrastructure issues to be dealt with. Mostly the dearth of fueling stations, but also some safety issues. There’s a reason that natural gas has the rotten egg smell added to it. It’s a gas, and there’s the risk of explosions, which gasoline does not have. There’s a fire risk with gas, but not with natural gas. Also there’s the accident factor, which could make both filling tanks and collisions alot more… spectacular and less likely to survive in (just imagine the shrapnel). I’d imagine that the self-serve natural gas station may start off being the case, but is one or two high-profile accidents from making natural gas like gasoline in New Jersey and Oregon. Which will only serve to increase costs, both from wasted time and wasted money.

   Finally, there’s the running out of natural gas issue. The idea of running out of gas is problematic but solvable. You get a gas can and you bring it to the car, problem solved. Bringing a tank of natural gas might be a bit more of a problem. I could see it being like a propane tank, but there’s connection issues and how much would be needed to get the car to the nearest filling station (again bringing up the issue of the development of distribution infrastructure, especially in rural areas).

3. Economical ProblemsOne of the benefits that Pickens uses in his commercials to tout his plan is that natural gas is cheaper than gasoline, so moving to this technology will make things cheaper. However, it’s pretty ignorant to use today’s situation and pricing to extrapolate to what things will look like when everyone is using natural gas to power their vehicles. The transportation demand is extremely weak, and even suggesting that moving all of natural gas from electricity to transport will result in no net gain in demand is kinda silly. Especially if the technology takes off.

   In addition, there’s no current incentives for developing more natural gas in the US. Natural gas is found and developed in the same way that oil is. So when Pickens says “We can’t drill our way out of this problem,” he’s making the assumption that we’re not bringing more natural gas online, in the same way that we’re not bringing more oil online. So supply remains the same… well at least in the US.

   Which brings us to the other economic criticism of Pickens’ Plan, which is the transfer of money overseas. Combining increasing demand with non-increasing supply will mean a big gaping hole in the market. Which means that prices will rise further OR other suppliers will enter the market. Like those nasty foreigners that Pickens’ complains that are causing economic ruin in the US. Currently, 16% of natural gas consumption is taken in by imports and that figure has been rising along with oil imports. Of course, most of this right now is coming from Canada, but there’s only so much we can get from Canada. So this limited supply will only go to further increase reliance on foreign sources of energy in the future.

   So what’s the end result of the Pickens’ Plan? Definitely increased prices with increased government control of energy use, especially in the transportation sector, in exchange for cleaner emissions. If that’s the trade you want, that’s fine. But don’t think of Pickens’ Plan as a panacea to all things energy related.

Critique the Pickens Plan – Part 1 (Electricity)

There’s two major issues that the Pickens Plan has in terms of energy policy in the US.  The first is with energy production, the first part of his plan.  Basically, his idea is to turn the midwest into a giant wind farm.  Which is possible, but that won’t do what his second part of his plan requires:  freeing up natural gas for transportation.  Here’s why:

Solar and wind energy are uncontrollable.  The sun shines and the wind blows on their own schedule.  Contrary to public belief, the government does not have a weather machine, making it capible of creating clear skies and windy conditions whenever they are needed.  So the amount of energy created will not be able to tuned to the needs of the consumers.

There have already been two scenarios where wind has shown their unreliablity:

• The wind blows too much: Wind Power too much of a good thing
• The wind blows too little:  Loss of wind causes Texas power emergency

There haven’t been any problems with solar on this issue, but there hasn’t been as much reliablity on solar either.  But the fact remains that energy providers cannot sync up wind with demand, causing some serious problems with electricity.  An increasing reliance on unstable sources of power will just exacerbate this problem.

There is also the NIMBY problem, which has reared its head in all sorts of places, including Massachussetts, West Virginia, and Pennsylvania.  These areas are also where natural gas is more likely to be used due to local environmental laws.  So you would have to transfer the electricity from the midwest to the northeast to displace natural gas power production.  Transmission over more than a 1000 miles will mean more power lost and even higher demands on the system.  So putting these wind farms in the midwest won’t be alot of help in getting the power where it will be needed (coincidentally NOT the mid-west).

Luckily for Pickens both of these issues can be resolved.  The NIMBYism can be short-circuted, and the energy timing problem can be resolved through storing electricity (although the technology that would be required to do this is VERY far off, as they are having problem with creating batteries for cars, nevermind entire cities).

But this still leaves the problems with attempting to use natural gas in transportation, the second half of Pickens’ Plan.

Getting a consumer cost for Natural Gas Vehicles

I’ll have more to say about T. Boone Pickens’ plan on moving the US from an oil-based transportation infrastructure to natural gas based in a little bit.  But I first wanted to get the cost of Natural Gas to power consumers vehicles first.

In South Carolina, the gas cost for one million BTUs (MMBTU) of natural gas is $12.9787.  The only production natural gas vehicle is the Honda Civic, which has a fuel tank of 8.03 gallons of gas equivalent (GGE).  GGE is the standard unit for natural gas powered vehicles.  One GGE is 115,000 BTU so a fill up of a Honda Civic will involve 923450 BTUs of energy or .923450 MMBTUs.  So a fill up would be $11.95.  But that’s for 8 gallons equivalent, or a gallon of gas at $1.492.  Which puts us at where we were in late 2003/early 2004.

Keep in mind that this based on the local natural gas monopoly’s price for a vastly different market (primarily industrial use and consumer heating).  Very little is currently used for transport (other than the local bus system).  Moving to a mass consumption pattern like gasoline would be a very different animal indeed.