What the big boys said
T. Boone Pickens, USDA secretary and Ford's VP discuss energy

By Clarissa Kell-Holland
staff writer


Recently, three unlikely allies in the energy spectrum – Texas oil billionaire

T. Boone Pickens, U.S. Agriculture Secretary Ed Schafer and Ford Motor Co. Vice President Joe Hinrichs – spoke to business writers about the nation’s energy crunch and alternatives that are in the works to alleviate the nation’s dependence on foreign oil.

All three agreed on two key facts: the United States needs to adopt a national energy plan because it’s been almost 40 years since we’ve had one, and it will take significant financial resources to achieve this goal.

They did not agree on the best way to wean the U.S. from its dependence on foreign oil – no surprise there.

The Pickens plan

Are natural gas-powered trucks a viable option to diesel-powered engines for truckers?

Texas oilman T. Boone Pickens said he believes so. He’s even pledged to spend $58 million of his own money in advertising to promote his renewable energy plan, called “The Pickens Plan.”

After making much of his $3 billion estimated fortune in the oil business, in the past few years Pickens has turned his focus to renewable energy market sources: wind, natural gas and solar. His plan is to create a wind corridor extending from Texas to the Canadian border.

Pickens said that for nearly 40 years he has been warning every president that this day would come.

The U.S. accounts for only

4 percent of the world’s population, but it uses 21 million barrels of the approximately 85 million barrels of oil produced around the world every day.

“But worse than that, we are using 25 percent of the oil and we only have 3 percent of the reserves,” Pickens said. “We operate like we are big oil producers and we are not.”

Pickens said every American is to blame for why the U.S. has gotten into this predicament because for many years oil was relatively cheap and developing renewable fuel sources was not.

“When you look around for the blame for the (energy) problem, you can go to the leadership and you can go to every one of us,” Pickens said.

While there can be some cost advantages for large fleets, there are few, if any, for small trucking businesses. Large commercial fleets can install a natural gas fueling dock, as the Metropolitan Transportation Authority did in Los Angeles. The MTA converted nearly 2,300 of its large buses to run on natural gas.

But for those who don’t have their own facility, there are only about 1,500 natural gas fuel stations nationwide. That’s not a practical solution for long-haul truckers who have to fuel up frequently out on the road.

Food or fuel – the renewable energy debate

USDA Secretary Ed Schafer said the renewable fuel issue is a “debate that he’s happy to join.”

When asked whether the federal government’s focus on ethanol and biodiesel production is one of the reasons truckers and consumers are paying higher food and fuel prices, Schafer said both have been unfairly blamed for the spike in costs.

“Higher prices from corn certainly have had an impact, but those who are singling out biofuels for blame are really ignoring the elephant in the room,” he said. “That elephant is the roughly 60 percent increase in the world price of oil over the last 12 months.”

One of the key arguments against ethanol production, which is heavily subsidized by the government, is that making ethanol uses more of our valuable fossil fuel energy than it produces.

“Most studies I’ve seen – I think – confirm the fact that there is a positive energy generation from the production of ethanol,” he said. “It’s not a big one, though ... certainly not as high as some other biofuels can make.”

Schafer said the federal government’s goal is to generate 36 billion gallons of renewable fuels by the year 2020. Often, though, there is confusion between goals, targets and the definition of “actual” mandates.

“There is no requirement for ethanol manufacturing or investment,” he said.

Even though Schafer supports subsidies for the development and infrastructure for renewable fuels, at some point – when the company is profitable – he believes those subsidies should end.

“Importantly, I believe those incentives ought to stay there until the industry is mature, until money and dollars can be made, profits can be made, and the infrastructure developed,” he said. “And then those dollars should go away and into other public policy pursuits.”

What about hydrogen?

Ford Motor Co. has seen its vehicle sales and profits plummet because of record-high fuel prices.

Joe Hinrichs, vice president of global manufacturing and labor relations for Ford, said the lack of a national energy plan is one of the reasons the nation’s auto industry is on the verge of collapse. Ford, for example, is spending two-thirds of its $7 billion annual research budget on developing new alternative energy sources.

The company’s rollout of hydrogen-fueled powered vehicles isn’t expected to be ready until 2015, and the cost to open up one small hydrogen fuel station is estimated to be about $2 million.

On the commercial vehicle side, Ford has developed hydrogen-fueled internal combustion engines for a few bus fleets around the country; however, heavy trucks have been left out of the equation.

Whatever the answer may be to achieving energy independence in the U.S., it can’t come soon enough for truckers. LL


Editor’s note: Staff Writer Clarissa Kell-Holland was among more than a hundred business reporters and editors who gathered in September in Kansas City, MO, to hear what a line-up of experts had to say on a broad slate of energy-related issues. Other keynote speakers included Hugh Grant, CEO, Monsanto Co.; Sandy Barauh, acting chief of the Small Business Administration; and Duncan Niederauer, CEO of the NYSE Euronext, who all spoke on issues affecting the nation’s economy. The event was part of the fall workshop sponsored by the Society of American Business Editors and Writers Inc.