Can T. Boone Pickens really help solve America’s energy problem?

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Can T. Boone Pickens really help solve America’s energy problem?

T. Boone Pickens looks tired. Standing in a packed lecture hall at Rice University in Houston, he's hawking his Pickens Plan for energy independence, saying we need to use more wind power and natural gas. The 80-year-old, with flesh-colored hearing aids set deep inside his ears, looks confused and momentarily loses track of what he's saying.

He pauses, takes off his gold Rolex, slumps down on a stool and announces in his trademark drawl, "I'm runnin' out of money." Which, for Pickens, means he still has untold millions, possibly billions, in the bank.

He's been zigzagging the United States for eight months, spending more than $60 million of his oil fortune on TV ads and lectures promoting greener American energy, in which he is heavily invested. His companies have plans to build the world's largest wind farm in west Texas and have a significant stake in natural gas.

When he launched the Pickens Plan on July 8, 2008, gas prices had hit $4 a gallon and Americans wanted a wallet-friendly energy policy that included long-term planning and alternative fuels. Leftist green-power organizations finally had a public-relations darling in Pickens, a Republican who had funded the Swift Boat attack ads against John Kerry in 2004, and with the money and clout to be taken seriously on Capitol Hill and in the business world.

Global warming isn't his main concern. For Pickens, it's about importing less oil from "our enemies," becoming energy-independent and thereby shoring up national security. The Pickens Plan calls for building wind farms that will generate up to 22 percent of the nation's energy, creating a more efficient and expansive electrical grid, and using domestic natural gas instead of imported oil as a transportation fuel. In 10 years, Pickens says, the combination can reduce oil imports by a third.

At the moment, though, his $10 billion wind farm in the Texas Panhandle is on hold until at least 2011 because Pickens can't get financing together in the tightened credit market. Plus, his vision for natural gas still has at least as many opponents as allies.

Financially, 2008 was not kind to Pickens. People on Wall Street criticized his Dallas-based energy hedge fund, BP Capital Management, for maintaining a bullish view on the price of oil throughout the year. Bloomberg reported in February that the fund lost around 97 percent of its value during the last three months of 2008 and sold off its positions in all but nine of its 26 energy companies. The fund was worth just $40 million, down from nearly $1.3 billion at the end of September. Even by Pickens' standards, that's a lot of green.

Critics say the Pickens Plan is nothing more than a public-relations campaign driven by Pickens' ego. They warn that the oilman should not be mistaken for a tree-hugger. They say if he can get his wind farms and natural-gas interests up and running, his fortune would explode like a black-gold gusher. Pickens dismisses this by saying he has enough money and he just wants to leave a positive, lasting energy legacy for America.

A longtime free-market man, Pickens is counting on the federal government, tax incentives and subsidies to help make his dream come true.

He has crept into the nation's conscience, claiming that more than 1.5 million people have drafted themselves into Pickens' New Energy Army, an online militia of supporters who gather on Pickens' social-networking Web site, modeled after MySpace and Facebook. Pickens uses these masses to lobby politicians; he has received vital government help for his wind farms and appears to be gaining ground with his idea of using natural gas to fuel trucks and fleet vehicles. The fate of Pickens' massive lobbying effort rests with the likes of Democratic Senate Majority Leader Harry Reid and Speaker of the House Nancy Pelosi, whom Pickens has been referring to as his new, dear friends.

During his lectures, Pickens invariably rails against former U.S. presidents for not having an energy plan. Then he smoothly transitions to a story, told in the folksy style that Pickens easily employs, recounting the advice his father gave him in the late 1940s when Pickens was a sophomore struggling at Oklahoma A&M, now Oklahoma State University:

"He said, 'Son, a fool with a plan can beat a genius with no plan.'"

Pickens has a plan.

"I think we've got the fish hooked," Pickens says. "Now we've got to get it in the boat."

For more than 30 years, Pickens has found sanctuary and solace at Mesa Vista, his sprawling 68,000-acre ranch in the Texas Panhandle. He has transformed the rolling hills, canyons and creek beds along the Canadian River into what has been called arguably the best quail-hunting spot on the planet. He'll be damned if he'll let the soaring, industrial turbines of the world's largest wind farm cast their shadows on his country oasis.

That Pickens will not put windmills on his own land sits fine with Ronnie Gill, a rancher from nearby Miami. That just means more turbines for Gill.

"Everybody wants one and hopes they'll get one," Gill says.

Last year, Gill leased all 7,000 of his acres to Pickens for the proposed wind farm, which will span five counties. At $4 an acre, Gill is already making $28,000 a year for nothing more than signing a piece of paper. The hardened rancher smiles at the thought of what he'll bank when the turbines start cranking.

Pickens has said he can erect five turbines every 640 acres without interrupting cattle and farming operations, and that each turbine will produce between $10,000 and $20,000 a year in royalties to the landowner. Gill estimates, conservatively, that he'll pull in at least a quarter-million dollars a year.

Like almost everyone living in the area, Gill has heard criticism that the energy baron is simply out to make money for himself. Gill could not care less.

"I don't mind him making a buck because, I'll tell you what, he's generous enough to share it with the rest of us. And I really need it because I'm getting old and baldheaded."

Gill is not alone. City officials in Pampa, the second-largest town in the Panhandle, expect that the project will create thousands of jobs and increase taxes for the school district by as much as $2.4 billion by 2018.

Pickens' original plan, in July 2008, was to erect 2,700 turbines across 200,000 acres, generating 4,000 megawatts — enough to power between 1 million and 1.5 million homes. He wrote a $150 million check to General Electric to build the first 667 turbines. They're not scheduled to be delivered until 2011, which, given the economy, suits Pickens — he can't finance the project now anyway.

"It's sort of like, one time I asked my father if we could do something," Pickens recalls at a late-February event in Washington, D.C., "and he said there are three reasons we can't do it. The first one, he said, is we don't have the money, and it doesn't make a damn about the other two."

Even though things are moving slowly for Pickens, the U.S. wind-energy industry is hanging tough. Last year, the United States surpassed Germany as the world's largest wind-energy producer, according to the American Wind Energy Association, and more than 80 wind farms were under construction across the country. Production increased by 45 percent and met more than 1.5 percent of the nation's energy needs — still far short of the 20 percent that the Department of Energy claims can be accomplished by 2030.

When the stimulus bill passed into law, Pickens declared a halfhearted victory. The bill includes tax credits, grants and loan guarantees, but it's not enough to push his project over the hump.

The problem, says Tyler Tringas, a wind-energy analyst for New Finance Energy outside Washington, D.C., is that wind farms are capital-intensive and require tremendous sums of money up-front. Most of the tax credits are applied on the back end, to energy that is already being produced, so if the wind farm doesn't make money or even get off the ground, the tax credits are useless.

And once Pickens' turbines start producing power, he still needs to transmit the electricity where people live.

Pickens originally planned to spend billions stringing up his own power lines, but that idea died along with the economy. As luck would have it, the state of Texas stepped in to save the day.

The Public Utility Commission of Texas approved a $4.9 billion transmission plan that will run more than 2,000 miles of power lines with the capacity to carry 18,456 megawatts from the Panhandle to Texas' major cities. The project, commissioners say, will cost Texas ratepayers an additional $4 a month. The new lines should be in service by 2013, and Pickens is excited about tapping into them.

Nationally, the shortage of transmission lines is one of the biggest hurdles.

Pickens and others believe that the best way to build a large-enough grid is to do what President Dwight Eisenhower did with the national highway system: Have the federal government pay for it. The stimulus bill calls for more than $4 billion to modernize the grid, but to create a grid that could reach the 20 percent wind goal, estimates start at $60 billion.

And there's another fundamental hitch in the plan: The wind doesn't always blow.

Secretary of Energy Steven Chu said in late February that there isn't yet a serviceable large-scale way to store wind energy for later use. At the moment, most wind farms are backed up by natural-gas power.

Good thing Pickens is in that business, too.

One month after his visit to Rice University, Pickens is back in Houston, this time at TranStar, the Harris County transportation hub, preaching the evils of imported oil and pumping up his idea of using natural gas to fuel trucks. He's dressed in the same black suit, white shirt and Oklahoma State University-orange necktie that has become his unofficial uniform when speaking in public.

After the presentation, Pickens chats amiably with a few members of his New Energy Army and fields questions from reporters.

A journalist in his 20s approaches Pickens, who asks the young man if he's a member of his energy army. The reporter stammers before saying that he thinks joining would be a conflict of interest. With a smile on his face, Pickens asks if being pro-America is also a conflict of interest.

While Pickens was clearly joking, critics argue that this is Pickens' modus operandi: inspiring fear, making personal attacks and wielding patriotism like a cudgel.

One of his latest television ads shows Europe in a fictional blackout because Russia refused to sell its natural gas to several countries. Pickens ominously warns that, by relying on oil imports, this could happen to America.

In one incident, reported by The Wall Street Journal, Pickens was having breakfast with Bill Graves, the former Kansas governor who now heads the American Trucking Association. Graves was telling Pickens his concerns about using natural gas in trucks, when Pickens replied, "Bill, I just want to warn you on this. I'm going to make you look unpatriotic for supporting foreign oil. I just want to make sure you understand that."

Graves' spokesman, Clayton Boyce, says the former governor was mystified by Pickens' statement.

"Governor Graves has known Mr. Pickens for many years and knows that he's an unusual guy, to say the least," Boyce says. "To say that we're un-American because we're not supporting his plan doesn't make sense."

Energy consultant Anthony Rubenstein says he has seen Pickens' tactics firsthand.

Rubenstein was Pickens' opponent last November in the battle over California's Proposition 10, which asked voters to spend $5 billion of taxpayer money on incentives to purchase natural-gas vehicles and fund alternative-fuel research. The $29 million "Yes on 10" campaign was backed heavily by Pickens and his California-based company Clean Energy Fuels, one of the country's largest providers of natural gas for vehicles.

Rubenstein worked free of charge for the underfunded opposition, which reportedly spent $173,000. In the end, Rubenstein's team won when the measure failed 60 percent to 40 percent.

Though he says he can't prove it, Rubenstein accuses Pickens and his operation of launching a smear campaign after the Los Angeles Times published an op-ed piece by Rubenstein last July. Titled "T. Boone Pickens' 'Clean' Secret," Rubenstein argued that Pickens was trying to raid state coffers to help his company.

Rubenstein is convinced the "Yes on 10" campaign hired a Sacramento political consultant to create and then tell the media about a Web site,, aimed at disparaging Rubenstein's reputation and destroying his credibility on the issue.

The political consultant "sent out a press release saying he's starting a blog because 'Tony Rubenstein is a dickhead,' " Rubenstein says. "If you're telling me he did that for fun and for free, well, that's an interesting hobby that guy's got."

The consultant and the "Yes on 10" campaign have denied any connection.

Still, Rubenstein feels targeted by Pickens.

"It really hurt," Rubenstein says. "They were trying to destroy me personally so I couldn't make a living ... just because I was able to get my message out there, and it differs from his."

Other critics accuse Pickens of creating the Pickens Plan simply to satisfy his vanity.

Robert Bradley, of Houston's Institute for Energy Research, says, "What's at work is his gargantuan ego, and this is how he gets in the news."

Rubenstein believes the Pickens Plan is nothing more than the invention of some of the best public-relations minds in the country.

"What the Pickens Plan is," he says, "is a political campaign to exact, from the government, taxpayer monies to favor his investments. It's a PR plan to wrap himself in a halo of patriotism and philanthropy to make himself unassailable, so that anyone who criticizes him is now subject to vicious ad hominem attacks."

Even supporters have noticed that the Pickens Plan is an ever-changing, organic idea. Dave Hamilton, director of global warming and energy programs for the Sierra Club, says the latest incarnation departs from the original plan, which advocated using natural gas in all vehicles, not just in trucks and fleets. Pickens is also touting natural gas as a bridge to better technology in the future, not as a permanent solution. Since the economy turned south, Pickens has increasingly been claiming that his plan would create jobs.

Pickens denies that the Pickens Plan has been a movable feast of ideas.

"I have not changed. If you pinned me down six months ago, I would've said the same thing I'm saying now. I don't think it has changed. I think the way it's interpreted may have."

Like his beloved former President Ronald Reagan, Pickens seems to be made of Teflon. He fully admits to many criticisms, leaving nowhere for his detractors to go.

When asked about using fear and patriotism as a sword, Pickens says, "That's probably true. I think we do have something to be afraid of here, and yeah, it's patriotic to be for our own resources instead of foreign oil from the enemy."

Unlikely allies have Pickens' back when it comes to using patriotism to drive his message home.

"I've been talking like that for 20 years," Hamilton says. "Reducing our dependency on foreign oil and giving money back to consumers through energy efficiency are and should be core American values. Mr. Pickens is not the only one who's been doing this; he just has a bigger microphone than most."

Since January, Pickens has made scores of appearances alongside auto-industry executives and other businesspeople, reciting the same mantra: Natural gas is clean. It's abundant, it's American and it's the only domestic fuel with the power to move an 18-wheeler.

Pickens' idea of using natural gas to fuel passenger cars took a knife in the side when California residents rejected Proposition 10. Voters decided there were too many problems with converting to natural gas — starting with cost.

Mike Jackson, CEO of AutoNation dealerships, says the real "inconvenient truth" is that gas prices dictate what kinds of cars drivers buy and how they use them. When prices spike, hybrids and alternative-fuel vehicles are in demand; when gas prices sink, people want trucks and SUVs. With gas costing less than $2 a gallon, Jackson says, "Every day I start my morning at 7 a.m. pulling my hair out, saying 'How are we going to sell all these [more expensive] fuel-efficient cars that nobody wants?'"

Another problem, Pickens says, is that only one natural-gas car is being sold in the United States, compared with at least eight different cars produced by European automakers.

Pickens is focusing on heavy-duty trucks and fleet vehicles that return to central fueling stations every night — garbage trucks, city buses, taxis and commercial vehicles owned by companies like Wal-Mart and UPS. This approach has landed far more supporters than the original plan, but it still faces considerable criticism.

Tom "Smitty" Smith, director of Public Citizen's Texas office (an environmental advocacy group in Austin), says that while natural-gas vehicles run 90 percent cleaner than their conventional-fuel counterparts, they reduce greenhouse gas and CO2 emissions by only 20 percent, compared with a 50 percent reduction by hybrid-electric vehicles. Then there's the price of natural gas. While it currently costs less — priced at about $1.60 a gallon versus just over $2 a gallon for diesel — it is volatile, and the price will most likely increase if use and demand rise.

Pickens points out that in the last several years, huge natural-gas supplies have been discovered in Texas, Louisiana and West Virginia. Why not tap them? After all, the hydraulic fracturing method of extracting the gas, once thought to be dangerous (enormous amounts of water and chemicals are shot miles into the ground to split the rock and release the gas), was deemed perfectly safe in a 2004 report by the Environmental Protection Agency.

But a recent investigation by ProPublica, a nonprofit investigative-journalism organization, finds that this process may pose serious risks to the country's dwindling drinking-water supply.

One opponent of Pickens' plan for 18-wheelers is Graves' American Trucking Association. The group's vice president, Rich Moskowitz, argues that the cost of a natural-gas-engine truck runs between $40,000 and $70,000 more than a diesel truck, and most companies can't afford that. He acknowledges that tax incentives can help offset the costs but says, because the industry is so competitive, "the idea of spending 40 grand more on a truck is not something that's easily absorbed."

Other problems, he says, include a limited operating range for natural-gas trucks and their extremely heavy gas tanks that can add an extra 300 to 400 pounds. Due to weight restrictions imposed on them, trucks would have to carry less cargo.

The largest obstacle, though, is that there are few natural-gas pumps across the country, meaning an entirely new and costly infrastructure system would have to be built — a daunting task, given that the existing infrastructure for gasoline and diesel took the better part of a century to create.

"You can't just put one natural-gas fueling station every so many miles," Moskowitz says, "because without multiple stations competing, the prices will go up."

Moskowitz points out that Pickens' company, Clean Energy Fuels, is one of the largest manufacturers of natural-gas fueling stations in the country.

"Mr. Pickens is a very successful businessman, and I'm sure there's nothing better, in his mind, than to have a monopoly selling fuel to a captive audience," Moskowitz says. "The infrastructure issue makes me reluctant to warmly embrace the Pickens Plan as an immediate solution applicable to all segments of our industry."

That leaves fleet vehicles, and on this score, Pickens seems to be making the most headway.

The trash-removal company Waste Management is reportedly investing tens of millions of dollars in natural-gas vehicles and recently announced plans to build a $7.5 million fueling station in Seattle, with the goal of converting its entire Seattle fleet to natural gas within five years.

Wal-Mart has said it plans to begin testing natural-gas trucks, and at a February clean-energy conference in Washington, D.C., former CEO Lee Scott joked, "So Boone, please don't call me anymore."

Pickens is also looking to politicians.

The stimulus bill didn't do much for natural gas other than provide some tax incentives for installing fueling stations. Pickens had been pushing Congress to include a $28 billion pilot program to convert 380,000 of the nation's roughly 6.5 million heavy-duty trucks to natural gas. He claims that it would cost $75,000 per vehicle and create more than 450,000 jobs.

Now that Congress is turning its attention to drafting a comprehensive energy bill, Pickens' proposal appears to be gaining steam.

U.S. Rep. Ed Markey, a Democrat from Massachusetts and chairman of the Commerce and Energy Subcommittee on Energy and the Environment, shocked energy insiders in early February when he said, "And I guess the headline is, I agree with T. Boone Pickens."

Sen. Harry Reid also says he's onboard.

Pickens knows he needs the lawmakers' support and says he's prepared to apply as much pressure as it takes.

"Pressure," he says, "I can assure Washington has not seen before."

During a star-studded clean-energy summit in February at the Newseum in Washington, D.C., Pickens is beaming as he takes his seat between Al Gore and Secretary of Energy Chu.

"I hope there's cameras here that have me between two Nobel Prize winners," he says to the crowd. "It would be very exciting if my mother were still alive to see this."

John Podesta and his Center for American Progress assembled a who's-who list of Democrats and business leaders for the event, and all of them are treating Pickens like the cute girl in the room.

Gore compliments Pickens' leadership. Bill Clinton laughs at his folksy jokes. Carl Pope, executive director of the Sierra Club, thanks Pickens for publicizing clean energy.

"The glue that's been holding all this together for months," Reid gushes, "is T. Boone Pickens. He's put his money where his mouth is. He is my friend, and I say that with all sincerity."

Pickens and his interests —, Mesa Power and Clean Energy Fuels — spent more than $1 million on lobbyists in 2008, according to the Center for Responsive Politics.

Pickens is not shy about reminding politicians about his 1.5 million online members. He's mobilizing his troops and organizing a virtual march on Washington April 1-3 titled "Three Days That Will Change America." Along with several corporate sponsors, including American Electric Power, Owens Corning and the American Lung Association, Pickens is urging Americans to e-mail, write letters or go visit their senators and representatives. Public-relations man Elliot Sloane, who is promoting the event, says Pickens expects politicians to receive more than a million communications aimed at getting them to pass a favorable energy bill.

Washington insiders, however, say it's tough to gauge how effective Pickens' lobbying efforts have been.

Senate staffers, who would comment only on condition of anonymity, say Pickens has a talent for drawing attention, but there's little to no evidence that he has influenced actual legislation.

"Is he setting the agenda? No. He may even be behind a lot of Democrats in that area," says one staffer. "But you look to your friends on the other side of the aisle wherever you can find them, and if [Pickens] can help bridge the gap between the parties, that's terrific."

While Pickens has shown that he can get through every door in Washington, Joseph Romm of the Center for American Progress says Pickens has not done a great job swaying Republican lawmakers. No Republican House members voted for the stimulus bill, and only three Republican senators voted for it.

"Anyone who's willing to spend their own money, has a famous name and is doing counterintuitive stuff can always get media coverage," Romm says. However, "he can't be a serious player if he can't bring his own side to the table."

Lobbyists say Republicans have been receptive to the Pickens Plan, and Pickens says he's trying hard to persuade them that his idea is the way to go.

"I'd say that three or four months ago, they were pretty cold to me," he says, "and now they're more willing to come along. The further I go, the more I think [Republicans] realize that the plan has real merit."

The next step, he says, is working to get additional legislative help for the natural-gas effort.

"I think it's going to show up in the energy bill pretty quick," Pickens says one morning, several hours after his routine 6:30 a.m. workout. "There's no question we've got the wind started and we've got the energy grid going, and there's no question we're on our way to the last piece of the plan."

Critics accuse Pickens of being a hypocrite, morphing from a free-market capitalist into a panhandling socialist when it fits his financial needs. To that, Pickens says, "The free market is fine, but waiting on the free market can sometimes be disastrous."

Instead, Pickens chooses to wait on Congress. Only time will tell if the veteran hedge-fund manager has made the right bet.

"I feel great," Pickens says, "but until all the horses are in the barn, I'm not going to be tipping my hat or taking credit for anything."

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