When Effort Is Energetic

By ROBERT BRADLEY JR.

The First Billion Is the Hardest
By T. Boone Pickens

Both Adam Smith and Horatio Alger would find something to like in the rise of T. Boone Pickens. "Boy geologist" Boone quit a promising job at Phillips Petroleum in the mid-1950s and built, over the following decades, Mesa Petroleum, a top North American independent oil and gas producer. Mesa found lots of oil and gas, provided jobs for hundreds of workers, and earned wealth for thousands of investors. During the same years, Mr. Pickens's attempts to take over Cities Service, Gulf Oil, Phillips and Unocal made the whole oil industry shape up: His bids required the managers of each company to look hard at its practices and improve its shareholder returns.

Such accomplishments are the core of Mr. Pickens's 1987 autobiography, "Boone," which was updated 13 years later and retitled "The Luckiest Guy in the World." In those books, Mr. Pickens's political philosophy rang loud and clear. "I believe," he stated, "the greatest opportunity lies in a free marketplace." He warned: "There are powerful forces afoot trying to restrict that freedom in the interests of the vested and already wealthy. I am talking about a relatively small collection of corporate executives who would use the engine of American commerce for their own narrow ends."

And he was as good as his word, rebuffing oil-tariff proposals when crude prices plunged in 1986. In "Boone," he bragged that a U.S. senator once remarked: "Boone Pickens is the only businessman I know that if Congress would leave him alone he would never come to Washington." Alas, "The First Billion Is the Hardest" brings us a new T. Boone Pickens -- one a bit more roughed up by experience and a lot more inclined to travel to Washington.

In the late 1980s and early 1990s, Mr. Pickens faced financial death: Mesa had made major acquisitions on the assumption that natural-gas prices would not drop; but drop they did, and Mesa's debt proved so burdensome that the company was poised on the brink of bankruptcy. New owners eventually fired Mr. Pickens, a defeat that still rankles him. Then he founded BP Capital, devoted to investing in energy futures. It got off to a rocky start, though in the past eight years it has earned roughly $8 billion in commodity speculation. Now Mr. Pickens has new dreams -- and he is lobbying Washington to make them come alive.

In particular, Mr. Pickens wants the federal government -- through a mix of tax incentives, mandates and subsidies -- to override the market and redirect the uses of natural gas. At the moment, natural gas produces about a fifth of the nation's electricity; Mr. Pickens thinks wind power should do that work, with natural gas fueling cars and trucks.

To push his program, Mr. Pickens has all but put Al Gore in the shade with a $58-million public-relations campaign. "When it comes to energy, we are at war," he explains. "Sleepwalking" America -- if it is to dodge $200 per barrel oil -- must employ a "George Patton" to "lead us to victory no matter the obstacles." And, he says, "we have to make the transition in less than ten years."

"The First Billion" argues for this plan, along with recounting Mr. Pickens's business ups and downs. The book is often entertaining, featuring the usual "Boone-isms": e.g., "Show me a good loser, and I'll show you a loser." But readers unfamiliar with Mr. Pickens's earlier memoirs may not realize that the new one represents a kind of bait-and-switch. Mr. Pickens's standing to pronounce on energy matters was earned as a free-market producer. He is now using that standing to defy the market itself.

His arguments for a government-led remake of the nation's energy use are sketchy at best, dangerous at worst. Despite his grand claims, generating wind power is uneconomic, and transmitting it is even more so (windy places are far from electricity markets). Wind is unreliable, requiring constant backup from natural-gas-fired plants in particular. Wind takes summer days off. In Boone-speak, wind is all hat and no cattle.

As for natural gas: Mr. Pickens scarcely mentions the manifold problems with natural-gas vehicles, from the price premium for a new car (around $6,000) to the cost of fuel conversion (averaging around $12,000 per car). Converted vehicles must sacrifice trunk space to accommodate a heavy natural-gas cylinder. The task of retrofitting service stations, let alone cars, puts the cost of the Pickens Plan north of a trillion dollars. And what happens if oil prices fall and natural-gas prices spike?

Why is Mr. Pickens pushing this energy plan so hard, aside from the supposed good of the nation? The most obvious reason is that his Clean Energy Fuels Corp. -- invested heavily in natural-gas dispensing stations -- would be a big winner. Mr. Pickens also has on the drawing board a $10-billion wind-power project -- "the biggest deal of my career." Another reason, one suspects, is a desire to reclaim the kind of folk-hero status that Mr. Pickens lost after Mesa's fall. He might become the "greenest" energy man since Ken Lay was at Enron and Lord John Browne rebranded the "BP" of British Petroleum to mean "beyond petroleum."

A third reason is less obvious. Mr. Pickens refers to Big Oil as "the monster." Why such an animus toward an industry that has been at the forefront of the American dream? As it turns out, both Mr. Pickens and his father (a failed independent) spent unhappy years at Phillips Petroleum. During the takeover battles with Big Oil, Boone was professionally and personally smeared and was ultimately denied his dream job: running an integrated major. He also links Mesa's fall to overdrilling by the cash-flush majors.

A man is entitled to his vendettas, of course. But surely the government shouldn't help fuel them. One hopes that Mr. Pickens can reinvent himself one more time, remembering -- how did he put it? -- that "the greatest opportunity lies in a free marketplace."

Mr. Bradley is chairman of the Institute for Energy Research in Houston and author of the forthcoming "Capitalism at Work: Business, Government, and Energy."