The Pickens plan and crony capitalism by Larry Warrick


A Texas billionaire with a heavyweight investment in natural gas goes to Washington

80 House Republicans, many of whom claim to be ‘conservatives’, are co-sponsoring Rep. John Sullivan’s  (R-OK) H.R. 1380, the ‘New Alternative Transportation to Give Americans Solutions (NATGAS) Act of 2011’, also known as the Pickens Plan.  According to OpenCongress, the bill is “Designed to promote a switchover from petroleum-based fuels to natural gas for transportation.  Would provide a variety of tax breaks to trucking companies, vehicle owners, vehicle manufacturers and fueling stations to transition from gasoline and diesel to natural gas.  The bill would provide approximately $5 billion in subsidies over a five year period, though an official budget estimate has yet to be conducted.”

It is a generally accepted fact that energy independence is America’s Achilles’ heel.  America imports 75% of its oil from foreign countries, a situation that leads to a ‘complicated’ foreign policy and bleeds the country’s wealth to overseas suppliers, many of whom are definitely not our ‘friends’.  Domestically, it is estimated that we have 100 years worth of natural gas sitting right under our feet.  (No word on whether this accounts for the increased consumption that conversion to natural gas would inevitably bring.)  In this context, which is how the Mainstream media will most assuredly present this ‘plan’, Mr. Pickens is to be commended on his hard work in helping to solve our country’s greatest contemporary challenge.  He is a true patriot of our age and we should implement this plan will all we’ve got.

Now, what the MSM won’t be telling you:

According to the Florida Political Press, “As it happens, T. Boone Pickens is the largest shareholder in Clean Energy Fuels (CEF), which owns and operates 200 natural gas stations across the country. CEF owns BAF, a Dallas-based company that just happens to convert vehicles to run on natural gas. And Mr. Pickens also owns mineral rights to almost 200,000 acres believed to have significant natural gas resources. “

According to the bill, the US government is to provide heavy subsidies to the natural gas supply and conversion industries, specifically to convert existing vehicles to run on natural gas and build on existing fuel distribution infrastructure to include natural gas at thousands of filling stations across the country.  Like any government ‘program’, it is grossly underestimated.  Per the plan, the cost is $64,000 per big rig (currently 8 million on the roads), $11,500 per car (250 million) and roughly $100,000 in tax credits for each gas station (121,000 in the continental US) that converts to natural gas.  Doing the math, that’s $512,000,000,000 for big rigs, $2,875,000,000,000 for cars and $121,000,000,000 in gas station tax credits for a total cost to the taxpayer of $3.5 trillion.   Better get started on that ‘official’ estimate, because the ballpark is in another State, a faraway one!

According to  “Crony capitalism is a term that describes an economic system where people with good connections to the center of power – the “cronies” of the government – manage to place themselves in positions of undue influence over economic policy, thus deriving great personal gains.”  It’s interesting to note that a similar definition has been removed from the MSN Encarta website(“crony capitalism · cronyism  Definition: enrichment of well-connected: the flow of wealth to a small group of people who are already wealthy and well …”).  Investing is a lot more profitable when you can bend regulations in your favor; tycoons around the world know this already.

The free enterprise, small government Republican co-sponsors of this bill have embraced the crony capitalism and corporate welfare of the Pickens Plan with open arms.  By voting for this $3.5 trillion corporate welfare package, they will also be placing themselves in a position to profit handsomely from the astounding transfer of poverty from the rich to the poor that will inevitably take place (Nancy Pelosi is already licking her slavering chops).

As an aside, Al Gore, Barack Obama and Harry Reid have also all come out in support of this brilliant and timely plan to save America’s working people from the abyss of enslavement through government debt and energy dependence.

Mr. Pickens, please, go home, enjoy the billions you have already amassed and leave the energy independence to those of us who want smaller government and free markets.  Your ‘solution’ is nothing more than a scheme to pick the pockets of an already struggling American people.

In Liberty
Larry Warrick
Miami Libertarian Examiner
Nolan Chart

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  1. Brent says:

    If the government is going to subsidize anything, I’d rather them put money into a reliable, efficient, and clean-burning natural gas as opposed to impractical and unsustainable solar and wind types of energy production. At least by supporting CNG we will see an immediate decrease in oil prices which will help us out of this recession. I save almost 70% off my gasoline bill by driving a bi-fuel CNG car. I learned about it on They dont sell anything… just good resource for CNg car conversions.

  2. I understand the point you are trying to make about crony capitalism although I find it hard to believe the focus of the bill is to convert existing vehicles and not giving subsidies/tax breaks for the purchase of new gas vehicles (should have quoted the relative portion of the bill) but I got totally confused after you stated certain rich people were getting subsidized to saying the poor would get money from the rich. I don’t see where the poor get any money from this action other than the handful that might get jobs out of it and most of those jobs would go to middle class technical types or factory workers or go overseas for production. Also, if the switch over from oil to gas would have some major shared positive aspects, would you support a tax on dirtier fuels as opposed to an over bearing government subsidy program, the revenue of which could be used to reduce overall income tax rates?

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