Archive for the ‘Energy’ Category

The Pickens Scam

Saturday, September 27th, 2008

T. Boone Pickens has a great name, but he also has a lousy plan that he’s trying to push on the American public.  In the past few days a “Pickens Ambassador” has left two three (see below) identical comments on this site pimping the “Pickens Plan.” And I don’t doubt that the same comments have been left hundred of times on other sites.

Given their astroturf campaign, I thought a little rebuttal was in order.

According to the schizophrenic comment the government bailout of Wall Street is an “U.S. government.. orchestrated… campaign to Co-opt Pickens Plan SEO.” In other words the horrible bailout is an effort to undo the efforts of Pickens Plan supporters to push their plan to the top of search engine results for those who google “700 Billion.”

Yeah Right. No wonder he’s a supporter of the Pickens Plan if that is what he believes. Critics on the right and left have come out against the Pickens Plan. Despite Pickens’ supposed free-market proclivities, the plan is heavy on government intervention in the form of mandates.

Jerry Taylor of Cato has this to say about the plan:

Virtually every claim made by T. Boone Pickens to justify the lavish subsidies he is seeking for his wind energy investments is flat wrong.

First, oil imports are not the cause of high gasoline prices. On the contrary, oil imports serve to keep gasoline prices down. After all, we import oil for a reason; it’s cheaper than the domestic alternative. If we were to restrict our energy diet to energy produced in the United States, it would make domestic energy producers (like Mr. Pickens) far richer and energy consumers (the rest of us) far poorer, and GDP would be reduced as well. While one can understand why Mr. Pickens is attracted to the idea of “energy independence,” for the rest of us, keeping the country open to imported goods is pro-consumer whether we’re talking about oil, steel, textiles, or athletic shoes.

 

Second, we are no more forced to rely on the “good will” of foreign oil producers when we shop for petroleum than we are forced to rely on the “good will” of supermarkets when we shop for eggs and milk. Oil producers export crude oil because it’s a great way to make money—and for many, the only way to make money. And once that oil is in the global marketplace, market actors, not oil producers, dictate where it goes. Hence, we are betting on producer greed … which is a pretty safe bet.

Third, if wind energy were a sensible economic investment, it would not need the lavish federal and state subsidies already in place or the additional largesse sought after by Mr. Pickens. Likewise, if compressed natural gas (CNG) vehicles are an economically sensible alternative to conventional gasoline powered vehicles, then no government “master plan” is necessary to deliver them to market. Price signals will induce investors to invest and consumers to buy without government having to lift a finger. The same goes for all the other energy-related R&D Mr. Pickens would like the taxpayer to dole out. If that R&D is promising, it will be pursued whether government subsidizes it or not.

Fourth, if reducing our carbon footprint is the goal, then the most direct and efficient means of reducing that footprint is to impose a tax on carbon emissions and then leave it to the market to sort out how to most efficiently order affairs under those new prices. Maybe it will mean windmills and CNG, but maybe not. Perhaps it will mean more nuclear power, new hydrogen-powered fuel cells, “clean” coal, the emergence of cellulosic ethanol, battery-powered cars or hybrids—or a continuation of the existing energy base but less consumption as a consequence.

Of course, if the market were to go into any of those directions, Mr. Pickens would be out a lot of money, which is probably why Mr. Pickens wants to hard-wire the market to consume the things he’s investing in and have the government lavish him with subsidies in the course of doing so. I wish Mr. Pickens well in the course of his wind energy business, but I see no reason why taxpayers, ratepayers, or consumers ought to be forced to sacrifice in order to fatten his already ample bank account.

Kevin Drum (no advocate of the free market) further examines the plan and the potential windfall for Pickens contained therein.  You should read the full article, but here’s the money quote:

I don’t have any problem with people making money from clean energy. That’s how we’re going to get more of it, after all. But between his water-fueled eminent domain land grab in Texas and his support for a $5 billion bond measure in California, Pickens sure is using a lot of government dough to benefit himself. Something tells me there must be a better way to promote wind power than this.

Ultimately it seems Pickens is no different then all the other rent-seekers with their hands out. The only difference is Pickens is spending millions promoting his plan directly to the public.  And apparently he has a few “Pickens Ambassadors” leaving uninformed comments on around the internet.

UPDATE: Ha! In the time it took me to write this another identical comment was posted.