Pickens Plan

From MarketsWiki
Jump to navigation Jump to search



The Pickens Plan, launched by legendary oil executive T. Boone Pickens in July 2008, calls for building new wind generation facilities that will produce 20 percent of electricity in the United States and promote natural gas as a transportation fuel. It is estimated that the combination of these domestic energies would replace more than one-third of the U.S.'s foreign oil imports. The Pickens Plan says these goals can be accomplished in 10 years.[1][2]

The Pickens Plan originally focused on developing a wind powered electricity corridor in the U.S. from Texas through the Great Plains states to North Dakota, with an estimated cost for the entire project of $1 trillion, plus another $200 billion to build the transmission lines. Pickens said that a Department of Energy report supported his claim that 20 percent of the electricity in the U.S. could come from wind power and that North Dakota alone had the potential to provide power for more than a quarter of the country.[3]

Pickens invested $10 billion of his own money into an initiative to build the largest wind farm in the world that would produce 4,000 megawatts of electricity.[4] However, in July of 2009, Pickens abandoned this and decided instead to build a handful of smaller wind farms around the Midwest, rather than in the Texas Panhandle, the original site of the wind farm. Possible locations included Wisconsin, Oklahoma and Kansas and Texas.[5] The cost of this plan would be about $2 million.[6]

Pickens has said that he had to delay his wind plans because of the financing difficulties that hit wind farms across the country beginning in late 2008, as well as a fall-off in natural gas prices. The scaling back of the wind farm plan, according to the Dallas Morning News, was due to transmission constraints in Texas, which plans to build about $5 billion worth of transmission lines, but not where Pickens had hoped.[7]

Wind power accounts for 48 billion kWh of electricity a year in the United States — enough to serve more than 4.5 million households. That is still only about 1% of current demand.

The Pickens Plan is somewhat controversial in that it promotes a fossil fuel switch from crude oil to natural gas to fuel for transportation, which does not address the global warming issue since natural gas powered vehicles will still produce carbon dioxide emissions. There are also studies that conclude natural gas is less efficient than gasoline. [8]

Pickens also estimates that the cost to execute the plan is far less than the $700 billion the U.S. spends on foreign oil every year and also that natural gas is far more abundant domestically than crude oil. The Pickens Plan calls for a shift to natural-gas-powered vehicles by providing economic incentives for fuel stations to invest in natural gas pumps and for automakers to build or convert the vehicles to natural gas-power. Pickens Plan also calls for tax incentives over the next 10 years to encourage wind energy development.[9]

References[edit]