The Benefits of Investing in America
T. Boone Pickens
Monday, January 12, 2009
While the 111th Congress and the Obama administration work on the details of the federal stimulus package, we have to make certain that we are looking for nongovernment mechanisms to stimulate the American economy.
One large target for preserving American cash is the huge amount of money we are sending overseas to buy oil. If OPEC is successful in reaching its target price per barrel in 2009, reported to be about $75 per barrel, the United States will spend about $350 billion on foreign oil. That number will be repeated - if not exceeded - year-after-year until we do something to reduce our dependence on imported oil.
To put that into perspective, the District of Columbia spent about $900 million last year on all its public school programs. Money spent on foreign oil ends up funding the building of schools and malls in the Middle East. But if just one year's worth of the money we spend on oil were kept in the United States, we could fund D.C. city schools for 389 years.
It is unlikely, in the foreseeable future, that we will be able to completely wean ourselves from foreign energy sources. But we have significant domestic resources which are readily available and - to use a current phrase - shovel-ready - for development. Imports from Canada and Mexico should be secure well into the future.
The Great Plains is one of the greatest wind corridors in the world. According to a 2007 Energy Department study, a path, two states wide, reaching from Texas to the Canadian border can be utilized to provide at least 20 percent of our electricity needs - 200,000 megawatts of power.
According to that same study, you would add 138,000 new jobs in the first year and up to 3.4 million jobs over a 10-year span. If we do a similar build-out of the solar corridor from West Texas to California, all of those job numbers will increase proportionately. As Congress and the incoming administration are crafting a stimulus package which will be designed to spur job creation, incentives to develop large-scale wind and solar electricity production in regions of the country where they are wanted are cost-effective and will provide long-term benefits.
That energy has to be moved from where it is produced to where it will be consumed. To do that, the Congress should provide the necessary tools to create a 21st-century grid. Doing this now will provide tens of thousands of jobs from design and engineering through construction and maintenance phases.
It will also make certain that as non-fossil transportation fuels come online, the national infrastructure will be in place to allow them to be utilized as widely as possible.
Fully 20 percent of the oil we import is used as diesel fuel by long-haul trucks -18-wheelers - to move goods around the country. Some day battery or hydrogen technology will improve to the point where it can be used for heavy trucks, but that technology does not exist today.
The only domestic fuel which can replace imported diesel is natural gas. Aside from water, natural gas is one of the most widely distributed resources in the nation. Technologies to recover natural gas from huge shale basins have made trillions of cubic feet available for development and use. We have an abundance of natural gas, and it is cheaper and cleaner than diesel.
Manufacturing processes to produce heavy truck engines which use natural gas already exist. All that is needed is to provide incentives to truck owners - small businesses and major trucking companies - to move from diesel to natural gas as they go through their normal vehicle replacement cycles.
Providing similar incentives to fleets of all types - school buses, municipal vehicles and express delivery trucks - to upgrade to natural gas would serve the goals of cleaner air, cheaper operating costs and reduced dependence on foreign oil. The infrastructure needed would be paid for by private industry.
The final aspect of a plan to reduce our dependence on foreign oil is to increase the efficiency of homes and commercial buildings by adding insulation and improving the economy of interior lighting, computers, and other electric-dependent activities.
These steps must be taken as a coordinated program -a program which will diminish our dependence on foreign oil and provide more funding for crucial domestic activities.
T. Boone Pickens is chairman of BP Capital Management.