T. Boone Pickens is an oil man.  So he tells you in his new commercial plan to decrease “our dependence on foreign oil”, a problem from which “we can’t drill our way out”.  His plan entails moving from gasoline to compressed natural gas (CNG) for fueling our vehicles, and building a vast array of windmills to generate electricity, replacing natural gas-fueled electricity generation.  Mr. Pickens’s plan has many flaws, some of which are obvious, others that are not (although no less egregious).  This post will focus on the topic of switching from gasoline to CNG for fueling automobiles.

CNG already is an option in use on some vehicles in the United States; Mr. Pickens’s website claims 150,000 in the US and over 7 million worldwide.  Several cities use CNG-powered public transportation, and occasionally while traveling on the interstate I’ve seen travel information signs pointing out “alternative fuel” stations that include CNG.  Natural gas burns cleaner than gasoline, with fewer pollutants, including so-called “greenhouse gases”.  The US has great stores of natural gas, and it is easier and safer to process than petroleum.  There’s already an extensive pipeline system for natural gas.

However, Pickens’s plan would require a mass-scale retrofitting of millions of automobiles in the United States to allow for use of CNG, as well as dramatic changes in automobile production in the future.  Who would pay for these changes?  Obviously the answer is the consumer, either through a direct cost for the retrofit or the new car, or through government subsidy (and therefore through increased taxes).  There are also potential safety issues with CNG; remember:  the “C” stands for “compressed”, and natural gas under high pressure is potentially explosive.  A gasoline leak or spill is fairly easy to see and clean up; a natural gas leak is less obvious (which is why natural gas pipelines have foul-smelling mercaptan additives – natural gas itself is odorless).  Would a widespread conversion to CNG vehicles be less safe than the current system?  I don’t know, but neither, I suspect, does T. Boone Pickens.

There are many potential alternatives on the horizon to gasoline-powered cars:  gas/electric hybrids, hydrogen fuel cells, biodiesel, methanol, ethanol, electric, and others.  Companies are currently spending research and development dollars attempting to find the best, most effective, most economic alternative.  Pickens would bypass this research, and instead use government force to make the choice for us.  Rather than having the market decide on the next generation automobile based on cost and efficiency, he’s made his decision and is willing to foist that decision on us.

Of course, Pickens’s plan isn’t that brazen.  Companies would still be free to develop other alternatives to gasoline, including those mentioned above; however, government subsidies and incentives tend to distort the market.  Just as current ethanol subsidies have incentivized farmers to divert former food products to ethanol production and change their product mix (thus causing a global increase in food prices), a full-bore effort by the government to decree CNG as the alternative of choice would divert resources from other alternatives that potentially would be better in the long run.  The top-down, command-control approach has been proved wrong time and again:  the wisdom of the market, of individuals acting in their own self interest, is much more efficient than the decree of the elites.  If you doubt this fact, some refresher training on the fate of the Soviet Union would be helpful.

What would be the total cost of a large-scale conversion to CNG-fueled vehicles?  Pickens is not forthcoming with this estimation.  Even if he were, any estimate would be rife with conjecture at best, and more likely inaccuracy.  Such factors as the potential safety impacts mentioned above would be difficult to calculate, and of course the Law of Unintended Consequences always rears its head when the government attempts a massive government restructuring of the market.  Remember:  we use gasoline to power our cars because even at over $4 per gallon, gasoline is the most economically feasible method.

“Reliance on foreign oil” has become a negative buzz phrase of late, and with national security concerns, instability in the oil-rich Middle East and Venezuela, and the growing hysteria in the media about “Global Climate Change” and “carbon footprints”, often-disparate interest groups are scrambling for a more domestically-centered alternative to petroleum-based products.  Pickens, as a man who made his wealth in the petroleum industry, commands a certain respect that will surely convince some otherwise would-be skeptics that his plan is a solid alternative.  It does not, however, hold up to closer scrutiny.

The next post will look at the other aspect of the Pickens Plan:  the conversion to wind-based electricity production.