Second thoughts about the Pickens Plan

I'm rapidly losing faith in T. Boone Pickens and his mission to change the tenor of the idiotic debate over energy in this country.

I already expressed mild misgivings the week he unveiled the Pickens Plan.  But I gave him points for trying to get us out of the quagmire of a false choice between drilling on the one hand and conservation/alternative energy on the other.  Commenters responding to my post seemed jazzed by the idea that zero taxpayer dollars would be required. 

Ah, but it's not that simple.

From the Los Angeles Times, an opinion piece by Anthony Rubinstein appears to blow the no-public-dollars argument out of the water.  Now, Rubinstein appears to be a typical government-has-the-only-solutions kind of environmentalist, but his concerns can't be dismissed out of hand.

It would seem Pickens is bankrolling the campaign for a referendum in California this year…

This measure would authorize the sale of $5 billion in general fund bonds to provide alternative energy rebates and incentives — but by the time the principal and the interest is paid off, it would squander at least $9.8 billion in taxpayer money on Pickens' self-serving natural gas agenda.

The initiative deceptively reads like it's supporting all alternative-fuel vehicles and renewable energy sources. But a closer read finds a laundry list of cash grabs — from $200 million for a liquefied natural gas terminal to $2.5 billion for rebates of up to $50,000 for each natural gas vehicle.

Much of the measure's billions could benefit Pickens' company to the exclusion of almost all other clean-vehicle fuels and technology.

I have no idea whether Rubinstein's numbers add up.  But whatever the math, this sure looks like a huge back-door subsidy for the alt-energy industry in general, and Pickens in particular.

Bond issues are how cowardly state, county, and municipal politicians fund their favored schemes.  "This won't be funded with a dime of taxpayer money," they claim.  Except when it comes time to retire the debt, of course.  (Then they threaten to slash services if they don't get a big tax increase.)  But the strategy can work equally as well for a private party seeking a place at the public trough when he or she can't convince lawmakers put the line-items in the state budget.

So the free-market cachet of the Pickens Plan is already starting to look a little dicey.  And if the argument is that these alt-energy schemes can't succeed otherwise, might I suggest slashing tax rates in general to put more money in the pockets of the entrepreneurs who can make things happen, rather than using government as a blunt instrument of social engineering to steer investment into certain sectors?

But I digress.  The real problem is there will likely be more of these devil-in-the-details revelations about the Pickens Plan in the weeks and months ahead — making Pickens an increasingly flawed spokesman for the cause of Peak Oil awareness. That's the last thing we need.  It'll give the politicians every excuse to carry on their insipid false-choice debate, evading the harsh reality facing us, well into next year and perhaps beyond, even as gas climbs toward $7 a gallon.

The Daily Reckoning