T. Boone Pickens – greedy capitalist or caring environmentalist?

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t-boone-pickens-capitalist-environmentalist.jpgWhat would you do if you were worth $3 billion? T. Boone Pickens? Propose to build one of the largest wind farms in Texas, of course!

T. Boone Pickens, American financier and Chairman of BP Capital Management, ironically grew his wealth initially through mergers and acquisitions of oil and gas companies. From there, Pickens expanded his company, Mesa Petroleum, to be one of the largest independent oil companies in the world by 1981.

With his continued success came much criticism. During his peak, Pickens has been accused of being a “corporate raider” – investors who essentially direct or execute a hostile takeover of a company, often with the agenda of breaking up and selling various assets of the company to gain large profits. Though most of his attempts at corporate raiding failed, his endeavors drove the targeted company’s stock up, making Pickens and other investors millions of dollars.

So what does the once “most hated man in corporate America” named by Fortune Magazine do with his spare time today? Advocate for less dependency on foreign fuel and more towards renewable natural resources. With this change of heart, of course, comes foreign-oil-t-boone-pickens.jpgscrutiny. Criticized as being a hypocrite, Pickens is accused of “morphing from a free-market capitalist into a panhandling socialist when it fits his financial needs.”

Now, Pickens is urging America to quit its addiction to foreign oil, proclaiming it to be the “greatest threat to our economy and to our national security.” Using the latest figures by the Department of Energy, the US has imported 68% of its oil, or nearly $19 billion to foreign countries, and Pickens argues this trend will only continue upward.

His answer to America’s growing need is to look at our natural resources. In comes the Pickens Plan.

The Pickens Plan, costing approximately $10 billion, is a proposal of building the world’s largest wind turbine farm that “will produce 20% of our nation’s electricity while using our abundant domestic natural gas supply as a transportation fuel as well as for power generation.” Pickens spent about $58 million advertising his Plan and bought 667 wind turbines for the project.

wind-farm-t-boone-pickens.jpgHowever, this past Tuesday, Pickens has announced he has stopped his plans for building the 4,000-megawatt wind farm, citing several reasons including not being able to finance the project in today’s credit market, as well as being unable to build the transmission lines needed.

That, and China beat him to it. Not only does China’s wind project cost one-third less because of lower prices in manufacturing turbines and installation, it is expected to produce five times more power than Pickens’ proposal.

And just like that, the Pickens Plan was blown away. Or has it? Though his plans have been halted for the massive project, Pickens insists he’s committed to putting the wind turbines to good use. Now wanting to build multiple smaller wind farms, Pickens is eying possible locations such as Kansas, Texas, Wisconsin, Oklahoma and areas in Canada.

Though announced at a time when America really is in need of new alternatives, with growing demands and fluctuating prices for oil, one can’t help but to think: are his intentions genuine?

Greedy capitalist? Or caring environmentalist? You be the judge.

[photo credit: jurvetson, by derek, polytropos on Flickr]

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  • http://www.ashworthpartners.com Giovanni Isaksen

    How about both environmentalist and capitalist? The beauty of our system is that once a technology is developed, entrepreneurs will drive the use up and the cost down through competition. When the national interest, even national security is a risk government policy should be to both spur basic research and incentivize through policy and legislation. When all three, the environment, corporate and national interest are all aligned a la the moon program dramatic changes are possible.

    Yes it has taken us far too long to start weaning ourselves off the crack pipe of foreign oil and fossil fuels overall but I believe that is partially because we have failed to consider the complete cost of gassing up those giant SUVs. How many people in this country would even know where Iraq and Iran were on the map if not for our oil addiction? When prices at the pump were low and our SUVs were expanding one cost we needed to factor in was the young lives of our military personnel. What is the cost to their family to have them stationed half a world away, let alone that something might happen to them?

    There’s an old saying in boating: Buying the boat is the cheap part… The same with foreign oil, the price we pay at the pump is the cheap part of our addiction. Now that a well funded entrepreneur is willing make to talk not only with his words but also with his checkbook that the critical interests are aligned for success, even if it is thirty years later than we might have liked.

    Giovanni Isaksen

    Ashworth Partners Ltd.

    http://www.ashworthpartners.com

    giovanni@ashworthpartners.com

    http://ashworthpartners.blogspot.com

    http://www.linkedin.com/in/giovanniisaksen

    http://twitter.com/GiovanniIsaksen

  • SL

    Not that i oppose the capital Pickens is providing for cleantech development, especially when funds for such growth based venture projects have dried up over the last 2 years, but doesn’t his push on the Pickens Plan seem like a last hurrah to leave a legacy? The great American financiers like John Pierpont Morgan and John Rockefeller made lasting impressions through their philanthropic contributions to American society. A rich man like Pickens has nothing left to achieve other than cementing his fame. He’d rather be remembered as the father of renewable energy instead of the real life Gordon Gekko. Business aside, to me, Pickens is merely making peace with the damage he’s done in the past, from adverse environmental impact through his oil businesses to his corporate raiding resume.

  • http://www.ashworthpartners.com Giovanni Isaksen

    And so you would prefer he NOT do this? This is real life, not ‘The View’ so why all the whining about his motivation? What does it really matter, as long as he does a good job? Are only ideologically pure people allowed to build a legacy by accomplishing good deeds? How do you think Morgan and Rockefeller would be viewed if they were here today (or last year) doing what they did that made them able to afford all their good works?

    Beware of driving off the people who can afford to fund good works.

    Giovanni Isaksen

    Ashworth Partners Ltd.

    http://www.ashworthpartners.com

    giovanni@ashworthpartners.com

    http://ashworthpartners.blogspot.com

    http://www.linkedin.com/in/giovanniisaksen

    http://twitter.com/GiovanniIsaksen

  • Dwayne

    with his age I have to err on the side of wisdom…although he has profited from our dependency on foreign oil – perhaps he’s figure out by now how to profit on doing what’s good for his/our country.

  • JR

    Nothing wrong with making money and doing so while benefiting the environment. In fact the more “profit” there is or financial benefit (saving money by “buying green”) the more likely we will succeed in improving our environmental situation. And if one gets credit and leaves a legacy (and that is what motivates them) of improving the global environment… good for them! Good for us.

    • Sameer S Kulkarni

      I completely agree to JR’s view with regards to the need to be profitable.

      Unless the innate motivation is economically viable, there cannot be a large scale adoption or critical mass for renewables.

      Reaching critical mass is the key for every transformation.

      Remember the internet revolution – there was an inflexion point sometime in mid 90s – when the large (read ‘slow, expensive and arrogant’) monopoly network gear manufacturers started to give way to VC driven start-ups and when the number of such start-ups that created disruptive innovations (and disruptive scale), soared beyond a certain point, then the thing took off like a giant avalanche.

      Today, the Google phenomenon that we take for granted almost as an extension of our own being, was only an embryonic idea till a few years back.

      In contrast to that, the fight to ween away humanity from tobacco has been slow, dismal and painful (largely because the economic considerations weigh heavily against it).

      In fact we need as many billionaires (T. Boone Pickens’) as we can get and even VCs – big and small – to sponsor and steward this giant movement. Time is against us. Either we get tens of thousands of windmills networked by smart grids or we choke the planet with several billions of tons of carbon and sulpur – thanks to the developing nations’ arriving on the scene and staking their morally justifiable claim to an affluent lifestyle. The developmental pressures within China, India, Brazil and Russia will be so overwhelming politically that the goverments would be tempted to take the easy way out – ie. burn dirty coal or build hydropower stations to suck away river basins that are shrinking and may not be around after 15-20 years.

      Unless there is rapid ‘opinion’-ation from grassroots to the top, we may delay reaching critical mass. Every hand counts.

      In fact there was never a situation before where the the entire world could stand united against a common existential threat (for a change – we need not fight amongst ourselves for a piece of land or some goldmine or a depleting oil rig).

      The opportunity is colossal – in the order of tens of trillion dollars per decade by some estimates and more importantly, equity based (every nation or remote part of the global society has something or the other to offer);

      …..so colossal that we may virtually re-live an entirely new industrial revolution (ver2.0) with it’s own Edisons and Graham Bells (minus the baggage of world wars and colonial fights that came along).

      Regards,

      Sameer S Kulkarni

  • http://www.ashworthpartners.com Giovanni Isaksen

    JR and Dwayne, I agree completely!

  • S. Spacek

    He’s a product of Texas (like me); a money-hungry Republican (unlike me); yet: a people-friendly, maverick change agent to selfish big oil companies, CEO’s and stockholders wanting to perpetuate age-old, status-quo, buttoned- down fueling options.

  • S. MBA

    Let’s look into facts.

    1. T. Boone has been buying up water rights on the Texas panhandle for nearly a decade.

    2. The wind farms were to be placed on the Texas panhandle. (Have to pump out the water)

    3. The costs to be borne by Pickens were the windmills, not the infrastructure. In other words, Pickens was going to pay for the tires, and wanted the American taxpayer to pay for the rest of the car.

    4. Pickens paid for the greatest smear campaign “Swift Boats for Truth”. When the allegations were proved to be incorrect, he refused to pay the promised $1 million to John Kerry.

    Let’s not confuse Pickens as some sort of philanthropist. He is not. He is looking to profit at the expense of the American taxpayers. (IMHO)

  • Scott Ullman

    I don’t see what is morally wrong with making a profit on a project that benefits society at large. That is what capitalism is supposed to be about in theory. Sometimes in reality, capitalism, like any economic system is corrupted and deviates from the theoretical in actual application. We have seen this lately in the financial industry where profits are privatized and losses are nationalized through political corruption. In my opinion this is a moral problem; a society with corrupted morals will have problems regardless of the formal economic system. Profits, per se, are not the problem, the Soviets eliminated the profit sector and the results weren’t exactly great for the environment or for the working class either. I think that it is easy to judge after the fact about the faults of industrialists that have improved our lives immensely through the organizations they have built but have also had some negative consequences too. For example, we take for granted all the good things that our current energy system provides (long life expectancies and a standard of living that the middle class enjoys that a hundred years ago would have been unattainable even by royalty), while focusing on the negatives like pollution. People like Bill Gates, Andrew Carnegie, Henry Ford, the Railroad barons, all made billions, but where would the average American be without the things they made possible (the internet, cheap travel, an abundant food supply, extremely productive labor that allows us plenty of leisure compared to our ancestors). The concept of industrialists “having to give back” from their success has always troubled me because it implies that what they have done already is somehow invalid and morally inferior and the opinions of people with no skin in the game is somehow more valid. Although, once a person has made billions, I can see how they might want to choose to do something to mold their legacy, Carnegie built libraries, and the Gates are trying to find a cure for Malaria that is great. I would probably do the same if I was in their shoes. Pickens has the right to invest in alternative energy, even if it will make money and be partially paid for by the public (the early railroads received public aid in the form of generous land grants but the railroads enabled economic benefits to the public at large from then on). Sometimes profitability is a quick (though not 100% perfect) check to see if the limited resources invested in a project really are best in the project (versus some other competing need). After all, human wants/needs are infinite, resources are limited, and we have to be careful that we don’t waste precious resources on projects that might have been more beneficial employed elsewhere. I would like to give Pickens the benefit of the doubt and say that his motives are both pure and for profit, I see no contradiction. He is trying to solve some real problems, our $19 billion/month foriegn oil bill, the trade deficit, joblessness in rural America, pollution, and dependence on fossil fuels. If he succeeds in making headway on these issues, let him profit.

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