Boone Pickens likes to call it a "game changer," and the game he has in mind is a big one, the game for our global energy security. Boone is the billionaire Texas oilman who years ago warned that the price of oil will continue to go up, price plateau by price plateau - each plateau being higher and more expensive for the American consumer.
Sure the price of oil will dip from its highs, but then it will go up again to a higher plateau. As the years pass, the price of oil has been climbing and will continue to climb. That is because the supply of oil is finite and the demand is always growing. Worse, the United States, which uses 25 percent of the world's oil with only 4 percent of the world's population, has only 3 percent of the world's reserves, and that is being exhausted. We now depend on foreign oil for almost 70 percent of our oil needs. Our suppliers are countries such as Iraq, Nigeria, Saudi Arabia, Venezuela and Russia, which is to say, countries that are either unfriendly or unstable or both.
What is Boone's "game changer"? It is the NAT GAS Act of 2009, the New Alternative Transportation to Give Americans Solutions, that now has bipartisan support in both houses of Congress (S1408 in the Senate and HR 1835 in the House). Boone's Pickens Plan, inaugurated a year ago for energy independence, advocates all forms of energy production including wind and solar, but the alternative to oil that he now stresses most is natural gas. There have been breakthroughs in natural gas that make it extremely economical and clean.
In the last few years, natural gas has been found in abundance in the United States. In fact, we have 2,000 trillion cubic feet of natural gas reserves, mostly in Appalachia, Arkansas, Louisiana, Oklahoma and Texas - more than twice the amount of Saudi oil, enough to last us 100 years. Recent innovations make it cleaner to burn and cheaper to use. It is the only fuel that can replace diesel in semis and other heavy-duty vehicles. Battery power will not work on these behemoths, nor will ethanol.
The NAT GAS Act of 2009 that is pending before Congress will extend and increase tax credits for natural gas and fueling. The key clauses call for the orderly replacement of diesel-powered 18-wheeler semis and other heavy-duty vehicles with natural gas over a five- to seven-year period. That will amount to a savings of 2.5 million barrels of oil a day. It will cut our reliance on OPEC oil by 50 percent. This is why Boone calls it a game changer. With our reliance on OPEC down by 50 percent, the oil producers will have to negotiate with us for the price they charge us for oil. Also, we will have a breathing spell during which to find alternative sources of energy.
Searching for alternative energy sources is going to be important in the future, which might be just around the corner. The Indians and the Chinese are investing hundreds of billions in renewable energy sources. The Russians and the Chinese are also ensuring long-term supplies of conventional oil with their investments and diplomacy. Both countries have recently entered into deals with Venezuela to develop oil in that country's Orinoco oil belt, Russia for $20 billion, China for $17 billion. Worldwide, the Chinese have $126 billion in deals for the development and production of oil reserves.
The United States, says Mr. Pickens, has nothing like this in the works: "We're watching a game we can't enter because we have no team on the field." Even in terms of strategic reserves, the Chinese are catching up. We have 727 billion barrels of oil in reserve. They are on their way to meet and surpass us.
The good news is that this windfall of natural gas can buy us time, and it is produced right here in America. Perhaps more good news is that both the bills in the Senate and the House are truly bipartisan. In the House, 45 Republicans are co-sponsors with 42 Democrats as co-sponsors, and Democrat Dan Boren of Oklahoma is sponsor. In the Senate, the figures are two Republican co-sponsors and one Democrat, with Democrat Robert Menendez of New Jersey as sponsor. That is a formidable array of support. The bad news is that these bills are awaiting an end to the solons' wrangling over health care. What we see is congressional legislation that cannot fail to improve national security and energy independence lying dead in the water while a dubious bill fraught with angry disagreement and questionable consequences has center stage.
R. Emmett Tyrrell Jr. is the founder and editor-in-chief of the American Spectator and an adjunct scholar at the Hudson Institute.
By Douglas Holtz-Eakin
The young drop coverage to avoid higher premiums