Change Course Or Else, Says Oil Legend Pickens

Change Course Or Else, Says Oil Legend Pickens

By John O'Dell, Senior Editor

LAS VEGAS, Nevada --Energy gazillionaire T. Boone Pickens has been singing a variation of the same song for several years now, but it's a tune worthy of repeat play:  The planet, says a man who made billions in petroleum exploration and ought to know his stuff, is using more oil than it produces, the situation isn't going to improve and nobody's doing much of anything about it.

"America is in a hell of a bad spot," he said in a presentation Tuesday at the Alternative Fuels & Vehicles annual conference here.

Without a radical reduction in the nation's appetite for imported crude, which now accounts for 72 percent of our total daily consumption, "we are going to be reduced to something less than the superpower we are now."

For Pickens, who has become one of the country's biggest backers of wind energy and of natural gas as a transportation fuel, the cure is painful but necessary.

We must cut back on the use of oil for automotive fuels and shepherd in a rapid and widespread adoption of domestically produced alternative fuels, he said,

Pickens, who left the oil exploration business in 1996 to set up his BP Capital Management investment company and, it turned out, to become one of the nation's biggest alternative energy boosters, has big holdings in natural gas and, not coincidentally,  believes it to be the best interim solution on the transportation side of things.

"Everything" from propane to biofuels will have a place in the effort to reduce oil consumption, he said, but available supplies of domestically produced natural gas are the largest "alternative" energy source around and, if used entirely for transportation fuel, could reduce oil imports by 38 percent. He said he believes that aggressive development of wind energy, particularly in the so-called "wind corridor" that runs up through the central U.S. from the Gulf of Mexico to Canada, can supply 20 percent of the country's electrical power needs.

That, he said, would enable us to shift into the transportation fuels sector the natural gas now used to power electrical generating plants.

Pickens, delivers his often hard-to-swallow message in a folksy manner, sitting on stage in an armchair and "interviewed" by longtime associate Andrew Littlefair, president and chef executive of Clean Energy Corp., the now publicly-traded natural gas retailer he and Pickens co-founded in 1997.

Among Pickens' other predictions and pronouncements Tuesday:

• We have passed the point of no return in regards global oil usage, with daily production topped out at 85 million barrels of crude and daily consumption now at 86.5million barrels and growing. "And 85 doesn't cover 86.5," he said, no matter how much we might wish it so.

• U.S. politicians "totally do not understand energy" and prefer not to think abut it.  He recounted in an after-speech interview his experience as energy advisor to former New York Mayor Rudy Giuliani's short-lived GOP presidential campaign: "We only talked about it for 5 minutes."

• As a result of our gluttonous national appetite for oil – 5 percent of the world's population consuming 25 per cent of the oil – we now are spending $600 billion a year on imported oil, most much of the money going to countries that are not our friends, in what Pickens called "the greatest transfer of wealth in history."

• Imported oil will remain expensive because the producing countries know we will have to pay their prices unless we learn to curb our appetite.

• "Diesel will never again sell [at retail prices] below gasoline." Increased demand for diesel fuel, which comes from the same crude oil that provides gasoline, aviation fuel and home heating oil, has pushed the price past  that of regular-grade gasoline in much of the country. That, Pickens says, should be considered a permanent state of affairs.

• Ethanol, because of controversy about its sustainability and impact on grain supplies, "is an ugly baby, but it's our baby."  As a home-grown transportation fuel, it is better for us than imported oil.

• Concern about "peak" oil is valid but not pressing. Whether or not we reach a point where half the world's oil has been recovered and consumed is overshadowed by what, to Pickens, are the simple facts that we already consume more than we can produce and global consumption is increasing almost daily as China, India and Latin America develop. So far, he said, the excess consumption has been covered by reserves.

• Rising gasoline and diesel fuel prices are self-limiting because they will get so high, eventually, that Americans will reduce their driving in order to cut fuel expenses, at which point retail fuel prices will stabilize.

John O'Dell:  is an AutoObserver Senior Editor. Follow @AutoObserver on Twitter.