Author: Will Wilkinson

Vice President for Research at the Niskanen Center

7 thoughts

  1. I don’t think it’s clear that Boone’s plan will make us poorer. I’m as annoyed as anyone that he’s touting his plan as if he’s a completely disinterested party, but if I were a billionaire (instead I’m just an energy analyst) looking for energy investment opportunities, wind farms and natural-gas cars would be exactly where I’d start. Yes, wind farms require massive infrastructure investments to get the power to where the demand is. But I haven’t seen anything that says such investment (plus the investment in home refueling natural gas technology) is less than the collective money saved on fuel costs if we switched a significant portion of our vehicle fleet to natural gas–meaning that Boone could have a profitable business and the rest of us could be better off. (Gas is about a third as expensive on a $/mmbtu basis.)
    Granted, his nationalism is offensive, but in the case of natural gas it’s actually somewhat relevant, although only in the sense that liquefaction and regasification is quite expensive, so domestic (including Canada, heh) gas can be–and is right now–much, much cheaper, even with the world market in equilibrium (gas in Europe/Japan is just as expensive as oil).
    So anyway, I agree that it’s not better to in-source everything to make it all American. But I do think it’s better to in-source when such is cheaper, and there’s at least some evidence that Boone’s plan would make it so. (At least he thinks so–he’s gone ahead and built the wind farms and natural gas refueling stations–although of course he wants the government to make it more profitable, and sooner.)

  2. bottomofthe9th – I think Mr. Wilkinson’s point was not whether it is wise to invest in wind technology; it was that Pickens’ statement was nonsense. Don’t we agree that what Pickens said was nonsense?

  3. I don’t quite see how Pickens is an economic illiterate speaking nonsense. Will seems to object that he isn’t telling the whole story, that he doesn’t appreciate how “the reason Americans bought all this oil from abroad was that they had no way to get more energy bang for their energy buck,” but Pickens isn’t really interested in this point – or he’s speaking passed it. I take it that Pickens’ point is that, esp. over the long term, our investment in foreign oil isn’t mutually beneficial.
    If we were to pay now and invest in locally produced energy sources the cost would be dramatic, at least in the short term – but Pickens (as I understand him) seems to suggest that such short term costs are worth it, economically but also in terms of the environment and national security.
    This would obviously put some strain on the ability to create certain types of jobs (“stifling creativity”) but why exactly wouldn’t it help create others again? Does the money just get flushed down the toilet?
    I am an economic illiterate so any help here is appreciated.

    1. berger – Pickens says:
      But I mean, here with $700 billion going out of the country, and let’s say that we could cut it in half — $350 billion in the United States, can you imagine how that would multiply for jobs here. I’d much rather that gonna $350 billion was being used here than to give some for foreign oil.
      There’s nothing in there about environment or national security. And it is nonsense. It is on the same level, economically, as saying let’s stop buying backhoes from Japan, because we could create all these new jobs for Americans to move dirt with shovels and pickaxes. Whether the money is expended inside the country or outside the country is irrelevant. The only question is whether the expenditure improves efficiency.
      If Pickens were claiming that spending on the wind farms would ultimately reduce our total energy bill and give us more energy for less money, that would not be nonsense (whether that would be true is a different question).
      But that isn’t what Pickens is saying. He’s saying that even though we wind up spending more money on our energy, and thus depressing our standard of living, that is a good thing because we’re giving the money to Americans. That statement is nonsense.

  4. Just a note that here in New York State our electric supplier was given the green light to sell out to a foreign owner—goody. I feel much more secure knowing the media I watch and see and now my electric utility is foreign owned.

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