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Stimulus and Energy

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President Obama's team is settling into their new offices and the new Congress is getting used to those new people talking about new approaches to America's problems. A major issue they should all pay close attention to is the national security threat posed by Russia.

In the deepest part of this winter, Russia held most of Europe hostage to a natural gas fight it was having with Ukraine. This wasn't the first time. In fact, this was the eighth time since the mid-90s that Russia has used natural gas supplies as a weapon to impose its will on its customers.

What is the U.S. national interest in this? Our interest is about $500 billion per year.

We import more than two-thirds of the oil we use every day. Look at where we are now. The recession is getting deeper and oil prices have dropped $100 per barrel since last summer. Even with all that, in December, 2008 we imported two-thirds of the oil we used; a total of 379.6 million barrels of oil which cost us of $19.3 billion. One month.

That's at currently (and, I believe, temporarily) reduced prices. Even if oil stayed at these prices for a full twelve months, we would spend more than a quarter of a trillion dollars per year in 2009 and every year into the future.

If oil prices reach the price point that OPEC seeks -- $75 per barrel -- that annual bill will go up by an additional $100 billion over the next 12 months.

We won't have to worry about what's in the stimulus package. We won't be able to afford any of it in five years.

About half of the oil we import comes from countries which we know don't have our best interests at heart, or are from unstable areas of the world, or both. According to the Energy Information Agency, 51 percent of our oil is imported from the Middle East, Africa and Venezuela.

Russia, which used to send a few observers to meetings of the Organization of Petroleum Exporting Countries (OPEC) recently sent 22 high-ranking officials to an OPEC meeting. Russia is going to be a full member of OPEC. And soon.

So, we will have Russia, which has more than a decade of practice using fuel as a weapon in Europe, teaching the other OPEC members how to run that same tactic against the United States.

The last time there was a major disruption in oil imports was in the early 1970s during the "oil embargo." That was when OPEC wanted to change America's foreign policy in the Middle East.

I remember the disorder that embargo caused. I was in the oil business at the time. But, here's the important point to keep in mind: In 1970 we imported less than a quarter of our oil; about 24 percent.

Today, we import nearly 70 percent of our oil. Even a minor disruption in oil deliveries -- in the Russian style -- would be a huge jolt to our economy which is already on the rocks and would send oil prices through the roof.

We don't have to be at the mercy of OPEC, with or without Russia as a member. We have the capacity to reduce our dependence on foreign oil by 50 percent overall which would allow us to reduce to zero the amount of oil we import from the Middle East, Africa and Venezuela.

In his inaugural address, President Obama called on us to utilize our wind and solar resources to generate electricity. No matter what your position on "clean coal," it is obvious that a generation system which uses no fuel whatever is going to be cleaner than even the cleanest fossil-based generation method.

The U.S. wind corridor is a huge swath of the Great Plains which runs, two states wide, from northern Texas to the Canadian border.

A Department of Energy study in 2007 said that building out our wind capacity in that corridor could provide up to 20 percent of our power needs and, in addition to generating electricity would also generate 138,000 new jobs in the first year and up to 3.4 million jobs over a 10-year span.

Those numbers don't take into account the additional energy and jobs which would be generated by building out our solar capacity in the corridor running east and west from western Texas to California.

But all that, plus building a 21st century transmission grid, will take time and every day which goes by without reducing our oil imports is another day which sends nearly $650 million dollars out of the country.

The fastest method to cut down on oil imports is to incentivize trucking companies -- large and small -- to replace their heavy trucks burning diesel fuel with trucks which will run on natural gas.

A battery will not move an 18-wheeler. That technology will come, but it doesn't exist now. The only fuel which will replace imported diesel is domestic natural gas. Natural gas is in abundant supply in the United States.

We should subsidize truckers to replace 350,000 trucks with natural gas engines in the normal course of fleet renewal. There are about 6.5 million heavy trucks on the road. That's about five percent of the U.S. fleet.

That one program would have the effect of reducing our petroleum imports by over five percent. As manufacturers ramp up to meet an increasing demand, the cost-per-truck will come down and a subsidy will no longer be necessary.

With lay-offs announced by companies in the business of building heavy-duty engines, like Caterpillar, building hundreds of thousands of engines using natural gas would save jobs which are on the chopping block or add jobs for those already laid-off.

Over the course of the next 10 years, getting 18-wheelers off diesel and on to natural gas would reduce our imports by 50 percent. That would be the 50 percent we now import from the Middle East, Africa and Venezuela.

OPEC would no longer be a threat and we would replace a intuitively dirty, expensive, imported fuel -- diesel -- with natural gas; a fuel which reduces carbon emissions by 30 percent and produces 93 percent fewer toxic emissions; which is cheaper (in fact, the United States has the cheapest natural gas in the world); and which is domestic (about 98 percent of our natural gas comes from North America).

Natural gas is not a permanent solution as a transportation fuel. It is the bridge to reduce our dependence on foreign oil by up to 50 percent while the technologies are developed to completely remove fossil fuels for transportation.

These are the basic tenets of the Pickens Plan. The Congress and the Obama administration can address the environment, the economy, and our national security by adopting these steps as part of its larger strategy.

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