|Oil man T. Boone Pickens has an idea about how we can reduce our dependence on foreign oil by nearly 40 percent or so in the reasonably near future. In fact, Pickens believes such a plan is essential. As he recently stated before the Senate Homeland Security and Governmental Affairs Committee, “Our country is in a deep hole, and it’s time to stop digging. We have walked into a trap, and we are the ones that put ourselves there. I’m not pointing the finger at anybody because it isn’t going to help, but we have to work together to get out of it.”
The United States consumes 25 percent of the world’s oil demand for just 4 percent of the world’s population. Most of that goes to motor fuels. Pickens’ plan involves the heavy substitution of wind power noting that the Department of Energy reports 20 percent of America’s electricity can come from wind. North Dakota alone has the potential to provide power for more than a quarter of the country.
Building wind facilities in the corridor that stretches from the Texas panhandle to North Dakota could produce 20 percent of the electricity for the United States at a cost of $1 trillion — roughly replacing the use of natural gas as an electrical generation fuel.
Pickens’ plan would require considerable infrastructure development, and it would not be cheap, but he asserts that compared to the $700 billion spent on foreign oil every year, it would be a bargain.
How does this filter down to the oil that is primarily used for motor fuels and, of course, heating oil? Well, currently much of our electrical generation is produced through the use of natural gas. Electrical power, and one would assume added nuclear power as well, would allow that natural gas to be moved into the transportation fuel markets — basically powering a notable percent of the vehicles on the road.
So, what is the impact for home heating oil dealers under such a plan? One could certainly imagine the cost of heating oil to drop as natural gas shifted into motor fuels and the demand for oil dropped. What about natural gas?
Natural gas would certainly still be used for heating and cooking and would take on a crucial role in transportation. It might be expected that natural gas would become even more price volatile and more expensive in response to the increased demand. Good news for heating oil.
Conversely, in addition to public natural gas filling stations, there is equipment that allows the driver to fill his or her car using residential gas. Not only would this negatively impact motor fuels marketers, but it could encourage the spread of natural gas into more areas to meet this added market need. Also, critics contend that while we are in a much better production position with natural gas, we would still need gas imports and oil imports and would simply be shifting some portion of Middle Eastern oil for Russian gas.
While far from a done deal, this is certainly an interesting idea that bears watching.
We mislabeled a photo on page 10 of FON July; it was actually a family photo of the Amthor family when Amthor International was named one of Virginia’s “Fantastic 50” companies. (L to R): Butch Amthor, Jr., Butch Amthor, Alice Amthor and Brian Amthor of Amthor International.