Alabama is a major player in the oil and gas business. The state earns nearly $3 billion per year from direct oil and gas production and its share of lease bonuses, royalties, trust-fund investment income and severance taxes. That’s a great deal of money, but when you look at the full landscape of our oil requirements you find the United States imports more than 10 million barrels of oil per day at a cost of about $1 billion per day-seven days a week.
That means Alabama’s entire annual income from oil and gas would pay for just three days of our oil imports. Seventy percent of that oil is used to power our national fleet of 250 million passenger cars and light trucks on gasoline and our 8 million heavy-duty trucks, which run on diesel. About 40 percent of our oil imports come from OPEC countries.
OPEC controls about a third of all the oil produced in the world and has the ability to artificially control prices. Anyone who remembers the Arab Oil Embargo of the early 1970s remembers how disruptive that was to everyone’s life – personal and commercial. Back in those days, we imported only about a quarter of the oil we required. Today, that requirement has risen to nearly two-thirds, which presents “a very real national security risk.”
I have been involved in promoting the use of domestic natural gas as a vehicle fuel since July 2008 when I introduced the Pickens Plan. This is how quickly the landscape – or the geological formation – has changed: When we began the Pickens Plan, natural gas was arguably a limited resource. Major users – the power companies, pharmaceuticals and chemical manufacturers – were cautious of using natural gas as a vehicle fuel because it would have raised prices.
Talk about a difference two years can make. Today, improvements in drilling technology have opened the vast shale deposits under Texas, Louisiana, Arkansas and Appalachia, in addition to smaller deposits scattered around the North American plate, to commercially viable recovery of natural gas. It is now estimated we have more than a 100-year supply of this clean, domestic resource.
I am not suggesting we can become “energy independent.” The sheer scale of the U.S. economy, which is twice as big as the second-largest economy, China, requires enormous amounts of energy. Our two largest petroleum-trading partners are Mexico and Canada – two countries whose economic health is closely tied to our own. What we can do is to become independent of our need for OPEC oil.
We can get off OPEC oil by using domestic natural gas, instead of imported diesel, to fuel the 18-wheelers, which move goods from border-to-border and coast-to-coast. Truck fleets are refreshed on a seven-year cycle. That means if we begin replacing diesel trucks with natural gas trucks next year, we can have the entire fleet off imported diesel by 2018. That would take care of about half the oil we import from OPEC. By jumpstarting a natural gas vehicle industry in the U.S., we would find a significant number of Americans might begin to ask for vehicles running on natural gas which, over the next ten years, would take care of the other half of OPEC oil.
People often ask, why not batteries for cars and trucks? A battery will not push an 18-wheeler. Battery technology is improving, but even a million battery-operated cars are a drop in the bucket when measured against the 250 million cars in the U.S. Moving toward natural gas as a principal transportation fuel – as we transition to a day when all vehicles will run on battery or hydrogen – is crucial for the environment, for the economy and for our national security.
I will be on campus this evening hosting a town hall meeting for the students, faculty and alumni of the University of Alabama. Ending our dependence on foreign oil is the calling of your generation. I am 82 years old; I can make it to the finish line. If young people like you do not force this country to get on its own resources, then you will see a dramatic reduction in your standard of living.
If you care about seeing America free from the national and economic security threats of OPEC oil, I hope to see you tonight at 6 p.m. at the Zone at Bryant-Denny stadium for my town hall.
T. Boone Pickens is the creator of the Pickens Plan. He can be followed on Twitter @boonepickens.
