Boone Pickens wants to convert America’s 140,000-unit fleet of 18-wheel truckers to run on natural gas. Pickens says the cost of converting the next-generation fleet of 18-wheelers would be about $60,000 per vehicle – or roughly $9 billion for the entire 140,000 fleet. Where will that money come from?Wow! What a great idea. Government spending always sounds like such a splendid investment when I read about in the media. But do we really trust these clowns and a self-interested billionaire salesman with billions more of our taxpayer money for an idea that he COULD fund with his own money but chooses not to?
Last week, Congressmen John Sullivan (R-OK), Dan Boren (D-OK), John Larson (D-CT) and Kevin Brady (R-TX) introduced H.R. 1380, the ‘New Alternative Transportation to Give Americans Solutions’ (NAT GAS) Act to supply the funds. It would ladle out a billion or two a year.
Is this a smart use of government funds at a time when the government is essentially broke? Yes, I think so. If you believe the Pickens numbers, our imported OPEC oil is costing America $2 billion a day and would cost $6 billion a day if unsubsidized by the U.S. military presence in the Middle East. Also, some percentage of the money we send to Saudi Arabia makes its way to our enemies, such as the Taliban.
Karlgaard answers with some non-sense about how we can thank industrial policy for the semi-conductor industry (weren't they invented at Bell Labs). So we get a one-sentence fable about semi-conductors and presto, we're suddenly supposed to think that industrial policy works:
To my libertarian friends: Don’t forget that the U.S. government bought the first billion dollars worth of semiconductors in the 1960s. That created the funds for factories and volume manufacturing which in turn drove prices down to affordable levels for civilian uses. Industrial policy? Yes.Very well then. Case closed. QED. Let's borrow another $9 billion ASAP and hand it over to some congressmen from Oklahoma.
How about this. Give us an example of brilliant industrial policy, pump-priming, "investment" that the federal government achieved in the last 20 years. Why do we have to go back 50 years to find a one sentence proof that industrial policy works?
My guess is that back in the 60's government semi-conductor policy was widely recognized as a disaster that set back progress for decades by pulling dollars and researchers into dead-end equivalents of lithium ion battery cars or corn based ethanol.
Now, a half century later with all of the players of the time are dead, it's safe for the publisher of Forbes to turn it into a fable. Maybe my grandchildren in 2060 can look forward to hearing about how savvy the government's "investment" in ethanol (um, alternative energy) was despite the fact that by then ethanol will have hopefully died.
I'm just surprised we didn't hear about the moon landing or the Manhattan project.
Lest this be 100% rant, why on earth is this a critical mass problem for private investors? If an idea is solid, private markets can raise $50 billion of capital. Is making natural gas tractor trailers or adding natural gas to a few hundred service stations an undertaking so monumental that it requires taxpayer money? If the return is there, private investors can bridge the gap.
My guess it that it isn't worth $60,000 to convert a vehicle to natural gas. Apparently it only costs $80,000 to $120,000 for a BRAND NEW VEHICLE. If natural gas made sense then the first place to look would be new vehicles. All told, I'm guessing that these truckers know more about their business than a bunch of knuckleheads in D.C.
If our objective is to reduce foreign oil consumption than any economist left or right can tell you that the solution is a tax on foreign oil. If you're a fascist then just apply the tax, straight up. If you're a libertarian and think the government sucks enough out of the private sector, then make it revenue neutral.
Finally, it's hardly worth fact-checking the numbers for a piece of such sloppy populist reasoning, but Karlgaard gets some important numbers wrong. Picken's numbers do not show that "our imported OPEC oil is costing America $2 billion a day." That's the total for all imported oil of which "people who hate us" only constitutes $500 million. And do we really need to spend taxpayer money to make us independent of Canadians and Mexicans? Lest we forget, we get oil for that money, including the amount sent to OPEC. Switching to a more expensive option doesn't "save" a dime -- it actually costs us more money.
This math error also flubs up the calculation for the price of oil that includes the Iraq war. Karlgaard says it's $4 billion a day. That's $1.45 trillion a year and much more than we spent on the Iraq war from day one till now, eight years in. But again, what's the point of quibbling over the numbers behind such populist rubbish.
I think natural gas is a solid option for transportation fuel, but please spare us from the billionaire snake oil salesmen peddling their newest scheme to separate taxpayers from more of their money.