Volkswagen, the storied German automaker, pleaded guilty today to three felony counts as part of a $4.3 billion settlement reached with the Justice Department in January over the automaker’s massive diesel emissions scandal.
There’s a great deal of irony in this, and a great opportunity for America’s energy security. Here’s why.
Back when President Obama rolled into the White House for the first time, I was in the midst of an aggressive campaign to address the stranglehold placed on our national security and our economy by addiction to OPEC oil.
The crux of that plan was to expand renewables (wind and solar) in power generation, and replace dirtier-burning and more expensive OPEC oil with our abundant supplies of cleaner-burning domestic natural gas in the transportation sector. The overarching goal was to break the stranglehold OPEC had on our economic and national security.
Washington lawmakers refused to foot the bill for America to go down that path. Now, in an ironic twist of fate, with the VW transgression, we have the Germans poised to finance it for us. And we’re fools if we don’t take advantage of this opportunity.
In 2015, the German automaker, Volkswagen, was found to have installed software on its diesel-powered vehicles that provided false emissions data — data that understated the emissions their vehicles were actually producing.
I’ve always been skeptical that diesel can ever burn as clean as alternatives such as electric cars or heavy-duty trucks fueled by natural gas. The lifecycle costs to produce diesel — from production to refining and out of the tailpipe — are just too great. Going to such lengths to falsify emission data just reinforces my skepticism, and my anger.
Since getting caught, the company has agreed to pay fines of $16 billion to settle claims for cheating. These fines will be paid to the U.S. government and shared among the states. In addition, owners of VW vehicles and the dealers who sold them will share in the proceeds.
We’re not talking chump change here. Texas alone, where I live, is set to get $191 million.
This flap once again underscores the need to get diesel vehicles off the road when and where we can, both for air quality purposes and to reduce our dependence on OPEC oil. One of the most toxic emissions produced by diesel engines is Nitrogen Oxide (NOx). It is generated by all internal combustion engines, but a new natural gas engine developed by Cummins-Westport produced 90 percent less NOx emissions than new diesel-powered trucks. That engine is available today.
State regulators ultimately tasked with spending the VW settlement should have some guidance from those with history, experience and knowledge — including industry, independent experts and environmental authorities.
First, a majority of the funds should be used for vehicles which already perform below current federal NOx limits, such as the Cummins Wesport engine mentioned above.
Second, all vehicles performing below federal NOx limits should be treated equally. States should look to decrease the number of diesel-powered vehicles on the road — especially heavy-duty trucks — and replace them with trucks powered by natural gas.
Why not go right to batteries? Because batteries will not move an 18-wheeler, and they cost at least five times more than comparable diesel-powered trucks. So, while electric cars are all the rage, batteries are not a substitute fuel source for over-the-road trucks.
Finally, while there will be justifiable efforts to use these funds on state fleets, it is even more important to find ways to allow private-sector fleets access to these funds. In fact, that’s where the bulk of the money should go.
Keeping in mind this settlement money is coming from a corporation and not the taxpayers, there will be no shortage of ideas from state regulators on how to spend these funds. States should show leadership by not using it solely to upgrade state fleet vehicles.
The reason is simple. If states use this money to replace aging fleets, this will be a “one-and-done” deal. On the other hand, if the money is used to provide incentives for the public and private sectors to purchase new, natural gas-powered vehicles, the positive effects on reducing NOx emissions will be magnified many times over the years.
Listening to President Trump last night deliver his first joint address to Congress – and his commitment to expanding America’s energy renaissance – reminded me of a story.
I’ve been a member at Augusta National Golf Club since August 1982. At Augusta, the club assigns you a caddy, and that guy will be your caddy as long as you live.
I’ve got a great one, Larry, who is highly skilled and always respectful.
One day as I was playing, I asked Larry, “We’ve got the best golf club in the world. Why do we close it in May for the summer?”
Out of character, Larry looked at me, and I could see in his expression that the man he thought was so smart was not so sharp after all.
“Mr. Pickens, that’s the way we’ve always done it.”
I’ve never stomached that kind of answer from any of my employees, but I didn’t say anything more to Larry on the subject.
I thought about this exchange last night, and the stark contrast in President Trump’s address and the comments just the week before by U.S. Rep. Maxine Waters when she threw out some harsh views for the president’s cabinet, calling them “a bunch of scumbags.”
She referred to the president’s supporters as a “Kremlin clan, all of them connected to the oil and gas industry.” The California Democrat was particularly pointed in her criticism of Secretary of State Rex Tillerson and his Russian oil ties.
Prior to his confirmation, I wrote that Rex Tillerson would make a great Secretary of State. And I think he will.
When is operating successfully in foreign countries, as Secretary Tillerson did when he was CEO of Exxon, a negative? It ought to be a positive.
I’ve been in the oil industry for 60 years as it helped America find great success by producing abundant, cheap oil.
Bringing Tillerson’s global expertise to the Washington mindset is a win for America.
I admire that President Trump is making us try something different. I have always believed that it’s important to show a new look periodically. Predictability can lead to failure. I think we’ve seen that in Washington.
For this edition of the Pickens Podcast, I went to the vault and pulled out a very interesting conversation between Fred Smith, Founder, Chairman, CEO & President of FedEx, Chris Spear, President and CEO of American Trucking Associations, and me.
Under Fred’s incredible leadership, FedEx has been the pointed end of the transportation fuel spear in moving his heavy-duty trucks from diesel to domestic natural gas. Fred tells us in this interview that FedEx Cargo and FedEx Ground drove 3 billion miles across the United States in 2015.
As I have been telling you for almost a decade, the benefits of natural gas as a transportation fuel are: It’s cheaper than diesel, it’s cleaner than diesel, it’s abundant, and it’s ours.
As one of the world’s largest consumers of transportation fuel, Fred also points out that because of its wide availability, natural gas has another advantage over diesel: It is price stable. Fred told me that just before the recession hit, oil was selling for $146 per barrel. This week oil is selling for about $53 per barrel. It is far easier for a major user to plan ahead when you know that the price of your transportation fuel will be stable.
Fred also talks about the new natural gas engines that are available today that are providing better mileage and cleaner operations, saying a new 8.9 liter natural gas engine from Cummins Westport, Inc. meets Nitrous Oxide emissions standards that are not required by the federal government for seven years.
Some of what you will hear, you’ve heard before, but it’s a great refresher. Much of this is new information you have never heard.
As we move into a new era of the way our Federal government looks at energy and environment, listening to this conversation will be a very valuable use of your time.
Subscribe to the Pickens Podcast on AudioBoom or iTunes, and let me know what you think via Twitter @BoonePickens.
We went back to six of the most interesting conversations we had for the Pickens Podcast series in 2016 and distilled those visits to our discussions of PEOTUS Donald J. Trump. During this Inauguration Season, I think you’ll find these conversations fascinating:
Former Three-Star General Michael Flynn talked about national security, intelligence, and what he would do about getting better information to the President. This was before he was appointed White House National Security Advisor!
Talk show host Laura Ingraham discussed the rise of Donald Trump and how his common sense connected to voters.
Editor-in-Chief of Forbes, Steve Forbes – a former Presidential candidate himself – talked about how Americans’ “disaffection with the political establishment” opened the door for Donald Trump to come in and “shake things up.”
Businessman Carl Icahn has been named by Donald Trump to be his special advisor to overhaul regulations. During the campaign, we got a glimpse of why Icahn is one of the most important voices in American business today.
Former Senators Tom Daschle and Trent Lott joined me and talked about Donald Trump as a person, not as a personality.
Former Republican National Committee Chairman and Governor of Mississippi, Haley Barbour, told us during the primary season that “anyone who underestimates Donald Trump has been asleep for the last nine months.”
I hope you enjoy listening to the “greatest hits” of 2016 as much as I enjoyed conducting these interviews.
Subscribe to the Pickens Podcast on AudioBoom or iTunes, and let me know what you think via Twitter @BoonePickens.
Forecasting the future is always risky and never easy, but I suppose I’m no stranger to it and my approach is always the same. I listen to smart people, learn everything I can, take stock of what I know, and the use the judgement I’ve built from experience to make a bet.
Over a lifetime in business I’ve had to make a lot of tough calls – right and wrong, and many of them very public. Good calls have made me a lot of money, and I’ve lost my ass on the bad ones.
Fortunately, I’ve been right more often than I’ve been wrong.
However, at 88-years-old, I’m not as concerned with being right about the future as I am with making it better. That’s why I launched The Pickens Plan eight and a half years ago. I knew then I had more history behind me than I did ahead, but I made it my mission to help break our nation’s historic and dangerous dependence on OPEC oil that threatens our economy, our environment and our national security.
Since then, we’ve seen an incredible increase in domestic oil and natural gas production. The incredible ingenuity and innovation of private industry has led to a continued decline not just in the price of natural gas, and American crude oil, but of wind and solar electricity as well. These stunning gains have been achieved despite continued foot-dragging in Washington.
We are still a long way from securing our nation’s energy future and are not without risk of failing. The domestic energy industry has lost nearly a quarter of a million American jobs since its recent peak, and OPEC continues working to maintain control of the market.
America is in the midst of an energy renaissance, and President Trump will have the opportunity to set the nation on a course toward self-sufficiency – our situation is good. Instead of predictions about the future, I offer my advice on how to make it great.
I suggest President Trump pursue an energy plan with two parts:
1. Don’t screw up what we have going for us.
2. Don’t settle for what we’ve done so far.
DON’T SCREW UP
1. Clarity in who makes energy decisions. Currently, decisions about energy are spread out among the President, the Department of Energy, the State Department, the Environmental Protection Agency, the Department of Commerce and the U.S. Congress, to name just a few.
2. Promote hydraulic fracturing and horizontal drilling. There are about 30 oil and natural gas producing states in America. In each of them, fracking has led to an increase in American production to nearly 9.5 million barrels of oil a day of oil, and has increased known recoverable natural gas reserves enough to make the U.S. the world’s leader – more than Qatar, more than Russia, more than Saudi Arabia.
3. Work with industry, not against it. Federal and state agencies should have a policy of working with the oil and gas industry to improve any safety or environmental issues rather than unilaterally imposing new regulations without understanding the full effects, or punishing the industry with new taxes to pay for programs that have nothing to do with energy production.
4. Meet our own energy needs before worrying about other countries. Don’t export oil or natural gas. The best way we can help Europe escape the yoke of dependence on Russian natural gas, and help Mexico maximize its oil resources is by exporting our technology and expertise.
OPEC is on the run, but they’re playing the long game. They’ve shown they are willing to risk everything to control as much of the world’s oil supply as they can. We still rely on foreign nations for more than six million barrels of oil a day. As long as we remain so dependent, we’re playing OPEC’s game. We need to not just match, but beat OPEC in looking at the long-term. How do we do that?
1. Work with our allies Mexico and Canada to establish a North American Energy Alliance to create an energy powerhouse that will never have to bow to the demands of OPEC again. We can start with approving the building of the Keystone XL pipeline to safely and economically transport Canadian oil to refineries in the U.S. rather than forcing the Canadians to ship that oil to China.
2. Modernize government fleets. Federal, state, county and local fleets should be looking for ways to save taxpayer money, strengthen our economy, and reduce pollution by leading the way in the changeover from gasoline and diesel powered vehicles to cars and light trucks that run on competing fuels that are cheaper and cleaner. The transportation fuels marketplace shouldn’t be monopolistic. Decisions about government fleets should be decided by competitive bidding with full life cycle costs factored in when considering competing technologies. If they did, taxpayer-supported fleets would catch up to the utility, express delivery, and other private sector companies with vehicles that go “home to the barn” every night for central natural gas refueling. In addition to the obvious benefit of lowering costs to taxpayers, the additional demand for natural gas vehicles (NGVs) by government fleets will drive down the cost of manufacturing and increase the rate of innovation for governments and consumers alike.
3. Build the electrical grid of the future. Electric vehicles aren’t going to replace oil and the internal combustion engine overnight. But renewable energy sources have a lot of potential, and we need a power grid capable of connecting those vehicles and everything else to the next generation of electricity generation. A grid designed to protect America against cyber or physical attacks and to promote efficiencies in home, commercial and industrial usage.
4. Continue to research and develop new sources of energy. Wind and solar prices are going to continue to drop, and the middle of America is the “Saudi Arabia of Wind.” States like Iowa have embraced wind energy and off-shore wind turbines are fast becoming commercially viable.
5. Remember: Energy is not a free market. Market forces are constantly being manipulated by central governments around the world which control about 70 percent of all oil production. America’s military protects Middle Eastern oil, costing American taxpayers tens of billions of dollars a year to ensure Europe, India, and China have secure access to oil supplies. The true cost of imported oil is not reflected at the pump. Governments pick energy winners and losers all the time whether it’s serving as the world’s oil police or providing natural gas to Central and Eastern Europe or subsidizing ethanol in the United States. It is time that we pick a winner, too: The United States of America.
For immediate release
December 14, 2016
Contact: Jay Rosser, email@example.com
Statement from T. Boone Pickens on Former Texas Governor as Pick for U.S. Secretary of Energy
Rick Perry is a friend. He was a great Texas governor, and I believe he will be a great Secretary of Energy.
Believe me, the man understands energy. He’s been a long-serving Texas governor who has witnessed first-hand what natural gas and oil mean to the state and national economies and the workforce.
He also presided over Texas during a time in which deregulation and transmission projects enabled wind energy production in the state to grow from 184 megawatts of installed capacity in the year 2000 to over 14,000 megawatts at the end of 2014. Texas continues to be the largest producer of wind energy with now over 17,700 megawatts of installed capacity followed by Iowa with 6,200 megawatts of wind energy.
He understands what happens to the oil and gas industry with too much government regulation and he understands how important domestic production is to our economy and our national security.
In accepting this role, I’m hopeful Rick will inject a dose of reality to an agency that has for far too long focused on research of energy resources that can be employed decades from now and not pursuing policies that can take advantage of America’s rich energy resources today.
In taking the job, I hope Rick recognizes that with five key factors we can “Make America Great Again” on the back of our nation’s expanding supplies of oil and natural gas and how it can be used to address our national security and economic concerns.
First, we must assign clear accountability for energy decisions.
Second, we must inject real fuel competition into the transportation mix.
Third, we should focus on meeting our own energy needs before we worry about other countries.
Fourth, we should pursue a North American Energy Alliance.
Fifth, we should remember that, globally, energy is not a free market.
New York Times reporter Joe Nocera and I taped this interesting episode of the Pickens Podcast shortly after our joint appearance at the Texas Tribune Festival. This is a wide-ranging conversation with a little focus on natural gas.
For a recent Times article, Joe and I talked about how I approach risk – and how I have my whole life. In this podcast, Joe asked me about the effect of natural gas selling for about $2.80 per thousand cubic feet (Mcf). When we started the Pickens Plan back in 2008, it was at $12.70 per Mcf.
If we could have gotten the NatGas Act passed back in 2013 and 2014, which provided a tax credit – not a subsidy – for truckers to move to natural gas, we would be sowing the fruits today.
One of the biggest problems we face is that there is not a single point of responsibility for energy policy. We have a Department of Energy, but we also have the Commerce Department, State Department, Interior Department, EPA, Congress, and the White House, all of which have a say in different segments of oil exploration, imports and exports, production, refining, and transmission.
I think you’ll find this conversation interesting and fun. It’s also a good summary on where we have been and where we are now on energy.
Subscribe to the Pickens Podcast on AudioBoom or iTunes, and let me know what you think via Twitter @BoonePickens.
The price of gasoline and oil is low, so we don’t need to worry about energy policy, right?
Smart energy policy is more important now than ever. And two significant things happened recently that warrant greater attention.
First, the Organization of the Petroleum Exporting Countries, better known as OPEC, announced its member countries agreed to slow production to bring the global price of oil up.
The OPEC oil cartel is made up of 14 member countries — including Iran, Libya, Algeria, Venezuela and Saudi Arabia. But not the U.S. The Saudis alone control one-third of the world’s daily oil production. With their cartel brethren, these countries get together and set production limits to control the price of oil for everyone, including us. Many of them are hardly friendly to our national security interests.
That’s scary because we depend upon OPEC for about one-third of the oil we need every day. As I’ve been saying for years — our dependence on OPEC oil forms the intersection of the three most critical issues we currently face: the economy, the environment, and our national security.
OPEC’s recent decision affects all three of these issues.
More recently, the Paris Climate Agreement was ratified and will take effect starting November 4, 2016. Coupled with the U.S. Environmental Protection Agency’s (EPA) stricter greenhouse gas (GHG) rules for heavy-duty trucks, we have to make some significant cuts to our emissions.
Unlike many other countries, we have a solution: American natural gas.
We’re blessed to have a supply of natural gas that can solve all of our problems for generations to come, and break the cycle of our independence on foreign oil. We can use it in energy production to supplement increasing reliance on solar and wind energies.
More importantly, natural gas can power any kind of vehicle, and is the only alternative to diesel in heavy-duty trucking use (no, neither electric nor ethanol can do it).
Vehicles powered by natural gas generally emit 13–21 percent fewer GHG emissions on a well-to-wheels basis than their gasoline and diesel counterparts do. And if these vehicles are using renewable natural gas, we’ll see up to a 90 percent reduction in carbon emissions.
That matters to many North Carolinians: Cummins Westport, a leader in bringing new, exciting engine technologies to the transportation industry, manufactures natural gas-powered engines at its plant in Rocky Mount.
That success story is one of the many things that excites me about our ability to better leverage our abundance of cleaner, American natural gas. We just need to ensure we’re working to get more of these kinds of vehicles on America’s roads through smart tax policy and regulations. Good thing U.S. Senator Richard Burr has been a leader in that space for years.
This time of the year is about being “loud.” We raise the volume of certain things to bring attention to issues that some believe will resonate most strongly. Accordingly, it’s easy to miss a steady drumbeat that’s been playing in the background. In doing so, it’s easy to miss the most important thing of all.
That’s what I think has been happening on energy.
I’ve been in the energy business for more than six decades. I’ve seen it all—booms and busts. And I believe we can once and for all break the cycle of dependence while contributing to a cleaner future.
In March 2012, Senator Burr gave an impassioned speech on the Senate floor in support of legislation that would leverage the power of domestic natural gas as a replacement for foreign, imported oil. He’s been a continued champion for breaking the OPEC stranglehold, maximizing the environmental benefits of natural gas, and letting this American energy source lead our energy future.
That’s what our energy policy — or lack of it — needs: leaders willing to keep their eye on the ball. Leaders willing to stand up and speak up for Americans everywhere. And leaders pushing smart policy.
We can’t afford to get lost in the “louder” conversation. And I’m grateful that Senator Burr isn’t letting that happen.
Boone Pickens is creator of the Pickens Plan, a grass-roots campaign aimed at reducing this country’s crippling addiction to OPEC oil.
The Pickens Podcast this week is all about higher education – why it’s important and who should pay for it. I went into this discussion with Jack DeGioia, President of Georgetown University – a private college; and Eduardo Padrón, President of Miami-Dade College which offers students post-secondary opportunities from certificate programs to associate degrees to full bachelor degrees.
These two college presidents had the tough task of trying to convince me that a college education should be available to any student that wants one.
They came pretty close.
Their best argument was this one: Of the 11.6 million jobs created in the U.S. since the recession, only 80,000 have gone to high school graduates. The rest went to people with post-secondary certificates and degrees. Then they told me that in the next decade we will have 11 million unfilled jobs that require post-secondary education. We can’t afford NOT to provide it.
President Padrón said that 100 years ago, “we were having this same national discussion over whether free public education from kindergarten through high school was a universal right and a public good. We’re having that same discussion in the technologically advanced world of the 21st century today.”
Listen to this fascinating discussion. I’d be interesting in hearing if, like me, you found their arguments not just interesting, but compelling.
Legendary journalist Tom Brokaw and Arizona State University President Michael Crow have come up with a concept that deserves your attention. It’s certainly got mine. It’s called the Next Generation Service Corps, and it’s already up and running at Arizona State. Here are insights from Tom and Michael on this great idea.
Young people don’t feel a connection to our institutions. There’s a big disconnect with kids coming out of college. Our country must develop new forms of public service for young people who don’t attend a military academy. That’s what the Next Generation Service Corps addresses.
Can big state universities help get the idea of national service leadership off the ground? The answer is yes. Arizona State enrolled 100 students in the Next Generation Service Corps in year one and another 150 in year two. The target for the next class is 350.
Free college isn’t the answer. There’s no such thing as a free lunch, and the Next Generation Service Corps recognizes that. Corps Members get full four-year scholarships, but once they graduate they spend several years in service to our country.
The biggest problem in higher education isn’t access. It’s completion. More than half the people who have started a college degree in the United States have no degree at all. They never finished. Corps Members are goal-oriented leaders with a mission in mind. It’s not a guarantee of a college degree, but it’s a big step.