How Our Energy Problems Will Be Solved

The other day I went to the pump and filled up my 2008 VW Rabbit.  With gas in my neck of the woods well over $4/gallon, it cost me nearly $60 to fill up my 14.5 gallon tank.  $60!  Dude, I drive a freaking Rabbit!  It’s like the smallest car ever.

It might not happen tomorrow.  It might not happen next week.  But if things keep going the way they are going gas prices are going to drastically change our lives.  Food and shipping prices will continue to rise.  Air fare will continue to rise.  It’ll probably get worse before it gets better.  We’re all going to be forced to make sacrifices.

I’m not trying to be bleak – just a realist.  With great problems come great opportunity.  I have no doubt that we will respond successfully, it’s just now a matter of how, when, and how bad it will get before alternative energies will be scalable. After reading an interview with Texas oil tycoon T.Boone Pickens in Fast Company the other day, I’m all of a sudden feeling a little bit better about things:

You recently announced plans to build the world’s largest wind farm, in the panhandle. Is that about money or the environment?
Money! First thing, it’s about money. Of course, I’m also a good environmentalist. I can pass the saliva test. But I’m not going to go do a 4,000-megawatt wind farm for the environment first and money second. I’d rather go give money someplace else. You’re talking about $10 billion.

What kind of return do you expect?
A minimum of 15%. It’ll probably be closer to 25%.

Tell me about the project.
It’s huge, the size of two nuclear plants in output, enough to power a million homes. More than 2,000 turbines, each between 2 and 3 megawatts. The first 1,000 megawatts will be ready by 2011, and 1,000 each year or two after that.

Transmission is a major challenge for most wind projects — getting the electricity to where the people are.
That’s right. The hardest part is having rights-of-way and buyers someplace.You’ve been planning a $3 billion water pipeline from the Texas panhandle to Dallas. Would the wind and water be transported along the same corridor?
Yes, if it goes to Dallas. We bought $45 million worth of water rights in Roberts County. We’ll transport 200,000 acre-feet of water a year. And we set up a water district that gives us the power of eminent domain for the transmission corridor. We can issue tax-free bonds. It has all the favorable characteristics of a city government.

How important is wind to America’s future energy needs?
The United States today runs on 987,000 megawatts, and the demand is going to increase 150,000 megawatts in the next 10 years — 15%. We could supply most of that with wind from the Great Plains, from Texas to North Dakota, but we’ve got to set up corridors to the West Coast and to the East Coast.

So you’re an oil man who’s turning his back on oil?
Foreign oil is costing us $500 billion a year. In 10 years, $5 trillion goes out of the country. It’s nuts. It’s the greatest transfer of wealth from one area to another in the history of the world.

You argue in your new book, The First Billion Is the Hardest (out in September from Crown), that global oil supply is slowing.
If I’m right, world oil supply has peaked. Existing fields are going to start declining at 5% to 8% per year, and it’s like a treadmill: As your production declines, it gets harder to keep up. Look at the biggest oil field in the world, Ghawar in Saudi Arabia; for every barrel of oil, they’re lifting six of water. That means the field has matured. It peaked at 5.7 million barrels a day; now it’s 4 million.

What will happen in the next five years?
Demand will go up, and price will go up.

Take a stab at what we’ll be paying at the pump in five years.
Oh hell, that’s so far out. Maybe $6 to $8 a gallon.

Is ethanol part of the solution?
Ethanol is political. That’s what Bob Dole told me in 1989. He called me up and said, “Quit talking down ethanol. You need to understand something: There are 21 farm states, and that’s 42 senators. Those senators want ethanol.” He said, “Are you getting the picture?” And I said, “Yeah, it’s coming through pretty clear.” [Dole confirms that Pickens’s account is “probably accurate.”]

Not exactly an inspiring vision of Congress.
The leadership is absolutely, totally pissy in Congress — a real conglomeration of fruitcakes. I mean pitiful people.

So would you cut the ethanol subsidy?
No. Hell, I’d rather subsidize ethanol or cream soda than have the money going out of the country buying oil. If you subsidize ethanol, the technology will ultimately get better. Corn will not be the primary ethanol fuel. They’ll go to something cellulosic. People who are against it say, “It costs so much to buy ethanol.” It costs more to buy oil from the Middle East. You’re better off circulating money in the United States. Create jobs here.

Money and politics aside, you’ve long said — like Al Gore — that climate change is happening, and it’s man-made.
It could be that it’s happening naturally, and we’ve pushed it over the edge. Regardless, I’m going to take action. Opponents say it’s going to cost so much money to address. And I say, well, hell, go ahead and spend it. I’d rather take a chance that I’m right than that I’m wrong. I don’t want to wait around until the house burns down ’til I decide whether it’s a serious fire or not.

F*ck yes! You have no idea how happy it makes me to read this.  Don’t get me wrong – me and T.Boone don’t exactly have a lot in common – but this guy is exactly what we need.  He admits that we have a problem and that the solution is about money first and philanthropy second.  That’s OK – like he said, it’s freaking $10 billion!   He’s a rich oil tycoon who sees financial opportunity in alternative energyThe largest problems in the world will be solved when they become the most lucrative to be solved.  People with the money and resources to truly make a global impact tend to focus on the things that will make them the most money.  This guy is so rich he could potentially save our country on his own.

Imagine if every oil bigwig got their head out of their ass and instead embraced the potential opportunity like T.Boone? Kudos to an 80 year oil tycoon for recognizing change and taking this on.  It would be easy for him to just sit on his money and relax for the rest of his life.  I’m glad he’s not.

3 comments on How Our Energy Problems Will Be Solved

  1. Gary says:

    You know I’m in agreement.

  2. Ben says:

    I agree but the sheer magnitude of the conversion required on the economy to deal with this problem requires more than 20 guys prepared to do this to generate

  3. Adam McFarland says:

    Gary – it was our convo that led me to write the post.

    Agreed Ben – I know I’m simplifying it a bit. It’s going to be absurdly hard for us to scale this correctly (for instance, does the value of a non-hybrid car like my Rabbit become worth nothing in a few years…and if so how does losing that asset impact ppl). I am just really excited to see someone like this step up, hopefully more ppl will do the same.

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