Boone Pickens Writes A Book

Yesterday, the Wall Street Journal published a review of T. Boone Pickens' recently-published book, "The First Billion Is the Hardest," by Robert Bradley, Chairman of the Institute for Energy Research in Houston, Texas.

Perhaps this passage is most telling in what we will learn of Pickens from this book review,


""Boy geologist" Boone quit a promising job at Phillips Petroleum in the mid-1950s and built, over the following decades, Mesa Petroleum, a top North American independent oil and gas producer. Mesa found lots of oil and gas, provided jobs for hundreds of workers, and earned wealth for thousands of investors. During the same years, Mr. Pickens's attempts to take over Cities Service, Gulf Oil, Phillips and Unocal made the whole oil industry shape up: His bids required the managers of each company to look hard at its practices and improve its shareholder returns.

Such accomplishments are the core of Mr. Pickens's 1987 autobiography, "Boone," which was updated 13 years later and retitled "The Luckiest Guy in the World." In those books, Mr. Pickens's political philosophy rang loud and clear. "I believe," he stated, "the greatest opportunity lies in a free marketplace." He warned: "There are powerful forces afoot trying to restrict that freedom in the interests of the vested and already wealthy. I am talking about a relatively small collection of corporate executives who would use the engine of American commerce for their own narrow ends."

And he was as good as his word, rebuffing oil-tariff proposals when crude prices plunged in 1986. In "Boone," he bragged that a U.S. senator once remarked: "Boone Pickens is the only businessman I know that if Congress would leave him alone he would never come to Washington." Alas, "The First Billion Is the Hardest" brings us a new T. Boone Pickens -- one a bit more roughed up by experience and a lot more inclined to travel to Washington."

Mr Bradley relates, in his next paragraphs, parts of Pickens' story which, at the time, I'm pretty sure I knew, but had long since forgotten,

"In the late 1980s and early 1990s, Mr. Pickens faced financial death: Mesa had made major acquisitions on the assumption that natural-gas prices would not drop; but drop they did, and Mesa's debt proved so burdensome that the company was poised on the brink of bankruptcy. New owners eventually fired Mr. Pickens, a defeat that still rankles him. Then he founded BP Capital, devoted to investing in energy futures. It got off to a rocky start, though in the past eight years it has earned roughly $8 billion in commodity speculation. Now Mr. Pickens has new dreams -- and he is lobbying Washington to make them come alive."

This, along with a later opinion that, along with already having substantial investments in natural gas distribution stations and wind turbine projects, a third major reason for Pickens' current energy 'plan' is,

".....less obvious. Mr. Pickens refers to Big Oil as "the monster." Why such an animus toward an industry that has been at the forefront of the American dream? As it turns out, both Mr. Pickens and his father (a failed independent) spent unhappy years at Phillips Petroleum. During the takeover battles with Big Oil, Boone was professionally and personally smeared and was ultimately denied his dream job: running an integrated major. He also links Mesa's fall to overdrilling by the cash-flush majors."

You don't hear that from Becky Quick on CNBC. Or from Pickens himself, obviously. But I think it's not a small thing in this recent crusade by Pickens to 'save' America from the horrors of free, Ricardian trade. By that, I mean paying $700B/year for oil imports, which we, it is assumed, use for more valuable purposes, ultimately creating one-quarter of the world's GDP in the process.

Finally, Mr. Bradley finds some problems, as I did in these posts- here, here and here- with Pickens' choice of wind and natural gas as immediate substitutes in America's energy mix,

"His arguments for a government-led remake of the nation's energy use are sketchy at best, dangerous at worst. Despite his grand claims, generating wind power is uneconomic, and transmitting it is even more so (windy places are far from electricity markets). Wind is unreliable, requiring constant backup from natural-gas-fired plants in particular. Wind takes summer days off. In Boone-speak, wind is all hat and no cattle.

As for natural gas: Mr. Pickens scarcely mentions the manifold problems with natural-gas vehicles, from the price premium for a new car (around $6,000) to the cost of fuel conversion (averaging around $12,000 per car). Converted vehicles must sacrifice trunk space to accommodate a heavy natural-gas cylinder. The task of retrofitting service stations, let alone cars, puts the cost of the Pickens Plan north of a trillion dollars. And what happens if oil prices fall and natural-gas prices spike?"

It seems I was not alone in wondering about the details of these proposals. Holman Jenkins castigated Pickens for skipping the details, and Mr. Bradley now provides some reinforcement as to why that may be.

I've written a few other posts involving Pickens and his energy 'plan,' which sentiments are also echoed in Mr. Bradley's piece. Specifically, that Boone Pickens is enjoying celebrity and attention over all of this, while casually dismissing his critics as being anti-progressive.

To my knowledge, nobody such as, say, Brian Wesbury, has weighed in on Pickens' claims of the danger of importing a lot of a commodity of which you have less, like oil, than you need for your economy's requirements. Nor have I heard any economists crediting Pickens with being a capable and reliable macroeconomist.

Yet, at base, those are the supposed foundations of Pickens' argument for his wind- and natural gas-driven energy 'plan.'

Mr. Bradley's review provides me with both good news and bad news. Good, in that I am apparently on target questioning Pickens' credentials, motives and analysis. Bad, in that, well, I'm on target questioning Pickens' credentials....motives....and analysis.

Few other people seem to be calling for more details on how you construct a nationwide natural gas distribution system for automobiles, nor for research on consumer acceptance of the new types of cars they'll be buying as a result of Pickens' self-enriching energy agenda.

As a friend agreed with me last night, whether we were to make a nationwide switch to electric-powered, or hybrid, or natural gas-fueled cars, either will require some pretty steep investments and detailed logistical questions to be answered. For example, how does a street-parked car in Manhattan get its batteries recharged? How does an average American family cope with having one car without a trunk, and only a short driving range before refueling?

And you can bet, whichever alternative power source were to be standardized in our country, you are going to be paying for the construction and operation of its distribution system. Who else will?

Which also brings me back to my point in this recent post- when is Pickens going to tell us all how his energy 'plan' will cause a rise in inflation for US consumers?

Mr. Bradley's review is timely and informative. I may even read the book, although, to be honest, I don't really want to further line Pickens' pockets with my money.