02/11/2009 05:12 am ET | Updated May 25, 2011

For the Pickens Plan to Work, People Have to Misunderstand It

Originally posted at The Seminal.

Last week I mentioned how T. Boone Pickens is trying to pressure Barack Obama into a flawed energy policy. But be forewarned, Barack Obama is not the only target for the Pickens Plan misinformation campaign. The only thing that can stop the Pickens Plan from being implemented is the taxpayers citizens understanding it. If they understand the Pickens Plan, they will not support it.

How can you tell an argument has hit a little too close to home? The bad guys start getting defensive and squeamish. This is exactly what happened to Mitch Jackson, Director of environmental affairs and sustainability at FedEx, when he wrote this well thought out blog post disputing the merits of natural gas vehicles point by point. Here are the three strongest points he made, in my opinion:

3. To use natural gas vehicles, we, as a nation, would have to build a completely new fueling infrastructure for vehicle fueling.

6. Natural gas, like oil (which produces diesel fuel and gasoline) is a fossil fuel which emits carbon emissions when burned.

7. Natural gas, while plentiful within the U.S., is, like oil, a fungible commodity - meaning that it can be transported and sold in other markets that require natural gas - including foreign markets. So, no matter that the fuel would be sourced locally in the United States - its price and availability, again, like oil, would be influenced by foreign demand.

The crack team over at the Pickens Plan responded as could be expected, by crafting a long-winded and rambling blog post, throwing out straw men and using deceptive language to create the illusion of a legitimate debate on the virtues of natural gas vehicles (NGV's). To be clear, among those who are actually interested in transitioning to a secure and stable energy and transportation policy, there is no debate. Nobody who knows what they are talking about really thinks it makes much sense to replace our dependence on one dirty fossil fuel with another.

For now, let's see how the first argument stacks up.

Jackson writes:

3. To use natural gas vehicles, we, as a nation, would have to build a completely new fueling infrastructure for vehicle fueling.

Pickens Plan writes:

Finally, Jackson questions the practicality of building a nationwide natural gas fueling network to power our vehicles. What Jackson fails to realize is that, unlike any other alternative to diesel or gasoline, the nation's natural gas pipelines provide virtually every American consumer or fleet, public or private, with an opportunity to fuel because the backbone of the fueling infrastructure already exists. This is how the rest of the world increased their natural gas vehicle populations by over 300 percent within five years totaling 8.6 million vehicles.

So wait, the argument is that 'natural gas is the only alternative fuel with a backbone of a distribution system already in place'? It's not clear whether the Pickens people are familiar with plug-in hybrid electric vehicles (PHEV's), which can go 40 miles without using any fossil fuel on a quick charge from your standard 110 volt outlet at home.

The Pickens people must also not be familiar with what is going on in Utah right now. Questar Gas Co., which operates a network of 19 natural gas refueling stations in the state, has been providing people who drive NGV's with fuel for less than it costs them. For 20 years, people in Utah who didn't have NGV's were subsidizing the fuel for their neighbors. The reversal of this policy, which is now being mandated by the state's Public Service Commission, is expected to increase rates from 80 cents per gallon to $1.43 per gallon, within six months. NGV drivers are outraged:

I trusted state agencies to provide stable/reasonable pricing for motor vehicle use of natural gas," wrote Michael Millet, a professor of automotive technology at Salt Lake Community College. "If I knew you were going to jack the rate up so high, I would have not gone to the trouble to convert or pay for the expensive equipment to burn natural gas."

This episode is an excellent example of the fact that natural gas vehicles can not pay for themselves. Whether it is taxpayer money in the form of subsidies or consumer money in the form of higher utility rates, any widespread effort to use natural gas as a transportation fuel would be dependent on transferring large quantities of wealth to natural gas companies who don't like us. T. Boone Pickens will never tell you this because for his plan to work, you have to misunderstand it. Look at what he puts his money behind if you don't think Boone is out to line his pockets with taxpayer money.

By implementing the wind investments and electric grid modernization Mr. Pickens advocates, while replacing our consumer and commercial vehicle fleets with electric vehicles and plug-in electric hybrids, we would essentially be able to fuel our vehicles with wind. Wind power is among the cleanest and most abundant forms of energy at our disposal. Any additional capacity generated by wind (solar, geothermal, hydro, etc.) should be used to take coal-fired power plants off the grid, starting with the dirtiest ones first. Using sustainable energy sources to replace electricity from natural gas, rather than replacing mean coal, is a fundamentally inefficient way to address our energy security.

Richard Kolodziej, president of NGV America, explains the crux of the problem faced by Pickens and others who have placed major bets on natural gas.

Because there are so few natural-gas vehicles, outside of commercial or government fleets, fuel retailers don't have much incentive to sink $500,000 to $750,000 into a natural-gas refilling station capable of handling cars as rapidly as a conventional gas station can.

There are currently about 1,100 natural gas filling stations in the United States (search by zip code here). There are about 115,000 gasoline stations in the United States. As Jackson mentioned, the filling stations and the NGV's themselves represent a chicken and egg problem: neither makes sense without the other. For natural gas to be as ubiquitous as gasoline and diesel currently are, someone would have to pay for over 100,000 natural gas filling stations. At a low-end estimate of $500,000 each, that is an investment of $50 billion. Building just 20,000 natural gas filling stations would cost $10 billion or more. Who do you think is going to pay for that? It won't be T. Boone Pickens, I promise you that.