There’s a question I get often when it comes to leadership. The question is this: “What makes a great leader?”
It’s simple. Be willing to make decisions and accept the consequences. Take into account all the information available, and make a call. That’s the most important quality in a good leader. Don’t fall victim to what I call the “ready-aim-aim aim-aim” syndrome. You must be willing to fire. It helps to be a good shot.
President Obama failed this leadership test in two ways with his handling of the Keystone Pipeline. Blocking the pipeline weakened America’s energy security and damaged prospects for a North American energy alliance while doing nothing to limit CO2 emissions (Let’s be clear: One way or another the oil is going to be extracted and used by someone).
Rejection was always going to be the wrong call. But the President compounded his mistake by dragging the decision out over seven years – time the oil and gas industry could have used to adjust plans for oil from Canada to U.S. refineries. Now 800,000 barrels a day will be shipped to China instead.
Looking to his remarks attempting to justify his decision makes the rationale all the more puzzling.
Take this line: “What has increased America’s energy security is our strategy…to reduce our reliance on dirty fossil fuels from unstable parts of the world.” While I strongly support this goal, I was not aware Canada was an unstable part of the world. Clearly this administration is not aiming to strengthen American energy security, but to wage war on all fossil fuels despite public comments to the contrary.
In his Keystone remarks, the President tried to imply the price of oil and gasoline have fallen during his term of office because of the policies of his administration. In reality, oil and gasoline prices have fallen in spite of having been a rhetorical piñata for the past seven years. Low oil prices for consumers exist because of the ingenuity, the innovation, and the investment of the oil and gas industry. Not because of the federal government.
The hydro-fracturing and horizontal drilling techniques that have made energy in America so readily available have given Americans the lowest energy prices in the world. According to economist Steven Moore, for every penny gasoline prices drop, Americans save $1 billion. Of that, 78 percent gets put right back into the U.S. economy.
When the President proudly proclaimed that our dependence on OPEC oil is down dramatically since he took office, he made it sound like it was his policies that did that, too.
It was not.
The more than 3 million members of the Pickens Plan Army having been calling attention to our dependence on OPEC since 2008. They have worked hard to help their elected representatives — at their state capitals and in Washington, DC — understand how important it was to them. Then state-by-state, they set about getting laws and regulations changed to help make domestic natural gas an economically feasible alternative to imported diesel.
Like so much of America’s history, progress has come not from the top down, but from the bottom up.
The President has stopped – at least temporarily – the construction of the Keystone XL pipeline. But, that won’t stop the relentless drive for Americans to create, to build, and to advance.
We will get to a day when hydrogen fuel cells or another zero-emissions energy source are the dominant method of powering automobiles and trucks, but it isn’t going to be soon. While we work toward that day we still need to move food, goods, and people from points “A” to “B.”
We do need a comprehensive infrastructure plan as the President suggested. But even before that we need a comprehensive energy plan, because the way we build out the 21st century infrastructure will depend on what we want to drive on it, sail in it, and fly over it.
We can have a spirited and profitably national debate on what an energy plan should include, but I know this: “No” is not an energy plan and it is not leadership.
The following opinion piece by T. Boone Pickens originally appeared on The Globe and Mail.
A few years ago, I launched the Pickens Plan in order to help free North America of its Organization of Petroleum Exporting Countries oil dependence, a clear threat to our economic and national security interests. That dependence was, and remains, the greatest transfer of wealth in recent history. The plan is aimed at developing cleaner domestic energy sources – natural gas, wind and solar – in order to lessen that dependence, create new investment opportunities and jobs, and improve the environment.
The recent decline in oil prices is not something we can enjoy for the long term. Global oil supply has temporarily exceeded demand, largely in part due to increased North American oil production, but future economic growth will mean oil prices will increase again and, as a result, alternate energy sources remain critical.
I’ve been in the energy industry for 60 years, with great success in both the United States and Canada. Unfortunately, after watching the green-energy industry unfold in Ontario, not only has the province missed a great opportunity, but its treatment of investors has left a dark cloud over the province and should be a warning to other investors.
It’s no secret that my organization, Mesa Power, has an active challenge, under the North American free-trade agreement, that involves Ontario because friends of the governing party were given special favour at the expense of investors such as Mesa. As an investor in Canada, my treatment by oil and gas industry regulators in British Columbia, Alberta and Saskatchewan far exceeds my treatment by Ontario energy regulators.
Businesses looking to invest depend on government having clear investment frameworks and fair criteria for choosing partners. That hasn’t happened in Ontario. Decisions based on politics rather than good energy planning have clearly demonstrated to me that Ontario lacks both.
The regrettable result is that I believe the province’s attempt to convert investment in the energy sector into jobs has suffered.
However, Ontario’s missteps and their energy controversies do not diminish the opportunity for our countries and economies to benefit from continuing to grow Canada’s domestic sources of energy, particularly natural gas and oil. These energy sources are still important.
Canada has a particular strategic advantage with its Western oil production capabilities and a willing buyer of Canadian oil to the south. Over the long term, the United States needs Canada’s oil. That’s why I think approval of pipelines, such as the Keystone XL project, remains essential for our countries’ shared economic success and our mutual desire for greater national security.
Let’s also look beyond oil. Like the United States, Canada has significant reserves of natural gas, which has enormous benefits in helping reduce North American dependence on foreign energy sources and meeting the public’s increasing desire for quantifiable advances on the environmental front. Natural gas is the cheapest energy source in North America, and new technologies have made the reserves of domestic natural gas increase significantly in recent years, creating huge new opportunities. This is particularly true in the transportation industry. Natural gas is 30-per-cent cleaner-burning than oil, and a perfect substitute for diesel for the thousands of trucks on our roads. Encouraging the use of more natural gas is something we need to continue to make a priority.
If we are to succeed in achieving energy independence in North America, I strongly believe that co-operation between Canada and the United States is vital. We are the world’s largest trading partners, share the world’s longest undefended border and have the opportunity to benefit mutually through greater energy co-operation. If we include Mexico and Canada in a North American energy alliance, there is little chance we will fall back into the OPEC dependence trap any time in the near future.
T. Boone Pickens visited CNBC this morning to discuss OPEC and oil prices.
Watch clips from his appearance:
The following opinion piece by Boone was also published on CNBC.com during his appearance.
The problem with my $70 oil call
By T. Boone Pickens
After oil prices plummeted, I went on the record saying I thought they’d be back above $70 per barrel by the end of 2015.
The year isn’t over yet, but my prediction isn’t looking good.
I thought worldwide demand would go up — and it has. The latest from the International Energy Agency shows demand is already up about 1.7 million barrels a day.
I thought supply from the United States would go down — and it has. Companies have been laying down rigs, and U.S. production has dropped by 500,000 barrels a day since June.
So where’d I go wrong? One word: OPEC.
I thought supply from the Organization of the Petroleum Exporting Countries — and specifically Saudi Arabia — would also go down. You can’t get rich selling anything for less than it costs to maintain the country. I expected they would at least maintain, if not cut, production to command a better price.
That didn’t happen. Rather than cutting back or holding steady, OPEC drove prices even lower as Saudi Arabia has increased production by almost a million barrels a day.
I erred in underestimating OPEC’s determination to keep the flow of oil under their control. The OPEC cartel is controlled by leaders whose top priority isn’t to make money for stockholders, it’s keeping themselves in power.
Even knowing that, I didn’t expect to see Saudi Arabia, Qatar, Kuwait and the United Arab Emirates all working to increase their market share by bringing new production online over the next few years.
They won’t be alone going forward. Iran will become an even bigger factor in the next few years now that the removal of sanctions allows them access to more of the world market. And Iraq has some of the world’s largest reserves. If the country ever settles down, the Iraqis will have a major say in world prices.
When it comes to the price of oil, which remains in the mid-forties, all of that gets taken into account. What doesn’t get taken into account is that the nations of OPEC have a long-term strategy, America doesn’t. And, on top of all that, we have Russia moving into Syria. That will invariably add a new dimension to the Middle East energy equation.
Even as OPEC loses money, they are growing their market share. When prices rise, they’ll rake in profits while the competition scrambles to catch up. It’s also a geopolitical move. The world depends on oil, and they’ve got their hands on the spigot.
The United States, however, is taking a short-term view. Our economy is powered by cheap energy, and $2 gasoline makes a lot of folks happy. We know it’ll hurt when prices go back up — which they will — but the American public has pretty much made energy a back-burner issue. Things are good today, so we’d prefer to wait until tomorrow to worry about the future.
We should be using this opportunity to debate, map out and plan for the future, and start putting a comprehensive, cohesive strategy for America to meet its energy needs without depending on OPEC’s influence over oil or natural gas prices.
The lack of momentum for a long-term energy plan isn’t surprising. There has been a gaping hole in American thinking about energy since the 1970’s. The Nixon, Ford, Carter, Reagan, H.W. Bush, Clinton, W. Bush, and Obama Administrations have all talked about the importance of energy, then failed to produce a plan.
The United States has the largest total energy reserves in the world. If we want to keep electricity, oil and natural gas prices permanently low, we have to begin working now.
Even a casual student of World War II understands the Normandy invasion began years in advance. The United States didn’t just need to recruit and train troops. They needed to be clothed and equipped. Planners began building mining capacity for iron needed to make enough ships and tanks, and coal to run the smelters. They trained welders and line workers — men and women — to build the planes and trucks.
D-Day was only possible because we started planning for it before we were at war with Germany or Japan — when we were at peace.
The future of energy is the modern equivalent. We should be using this time to plan our strategy for producing, importing and exporting energy. We should develop our rail, pipeline and electrical networks to expand and strengthen our ability to transport energy. And form a long-term agreement with our neighbors to the north and south to take advantage of energy know-how and resources.
This administration has run out the clock for a long-term energy plan. The ball is now in the courts of the candidates for president in both parties. They need to stop bickering about how they look, and stop bragging about what they did in their past careers. The candidates should take a good hard look at energy as a centerpiece of their economic policy and tell us what their plan is.
Commentary by T. Boone Pickens, founder and chairman of the hedge fund BP Capital Management and former CEO of Mesa Petroleum. He is also creator of the Pickens Plan, a plan to get the U.S. more energy independent, develop renewable energy sources and increase energy efficiency. Follow him on Twitter @boonepickens.