It is not news to Pennsylvanians that natural gas is about to change our lives much as oil did more than 100 years ago. In spite of the inaction or active resistance by our political leaders in Washington, it appears that the sheer volume of natural gas contained in our massive domestic shale plays is about to overwhelm the doubters and objectors and provide Americans with the first major shift in transportation since diesel replaced gasoline more than a half century ago.
Pennsylvania has not only taken the lead on the recovery of natural gas, but the Legislature is actively working to make natural gas trucks more affordable, which will increase commerce and decrease pollution.
My father used to tell me, "Son, a fool with a plan can beat a genius with no plan any day." Unfortunately, when it comes to America and our effort to achieve greater energy security, we're a foolish nation without a plan.
First, let's recognize the importance of transportation to our overall foreign oil dependence problem. Transportation accounts for 70 percent of our oil use. The oil that concerns me is OPEC oil, where I'm convinced a portion of our oil dollars winds up in the hands of terrorists.
We need to focus on replacing OPEC oil/diesel with domestic natural gas in the heavy-duty truck and fleet sector. Our domestic natural gas reserves continue to expand thanks to the domestic oil and gas industry's success with horizontal drilling and fracking.
Too many people whom I've spoken with mistakenly believe the amount of oil we consume and the amount of oil we import from OPEC nations can be dramatically reduced if we would just build and operate more solar and wind farms. Oil is a very small player in the production of electricity. Electricity in the United States is largely produced using coal, nuclear, hydro and, increasingly, natural gas.
The one place we can make an immediate difference in our relationship with OPEC is to shift heavy-duty trucks -- 18-wheelers, trash and refuse, and similar vehicles -- from imported diesel to domestic natural gas. There are 8.5 million of these vehicles and most of them either return to the "barn" every night, or for over-the-road trucks, they tend to run the same routes on a regular basis.
We don't need a natural gas refueling stop on every street corner. We can, and are, building liquefied natural gas stations along major Interstate highway routes, and manufactures are beginning to ramp up manufacturing of the trucks that will use them.
About 50 percent of the oil we import is refined into diesel fuel, so those trucks are a big target. The only fuel that can replace diesel to push a big rig is natural gas. Batteries won't and neither will biofuels.
But the key to any plan is accountability. And that's where we continue to struggle. Just whom do we look to in the United States to set -- and execute -- an energy policy. The president? Congress? The U.S. Department of Energy? The U.S. Environmental Protection Agency? The U.S. State Department (now deciding the fate of the Keystone Pipeline)? My guess is that unless we figure that out, our progress may not be as rapid as we'd like.
We must also consider that too many state laws, rules and regulations keep getting in the way. Also, the start-up cost of buying trucks that will run on liquefied natural gas is prohibitive for many small and independent operators.
Pennsylvania has begun to take steps to harness the full potential of its natural gas reserves. House Bill 301, introduced by Rep. Stan Saylor, is key to securing energy independence here in the commonwealth. HB 301 provides $50 million worth of tax credits for natural gas vehicles. The tax credit is worth 50 to 60 percent of the incremental cost of the vehicle, up to $25,000. Note, this is a tax credit -- a tax reduction on money the company has earned, not a check from the state treasury.
This bill, if enacted, will foster natural gas vehicle adoption by local businesses, thereby lowering their cost of operation while improving air quality and bringing Pennsylvania closer to breaking its reliance on foreign oil.
There is no "free market" in oil. More than 70 percent of the oil in the world is controlled by state-owned oil companies. The way to break the back of OPEC is to provide a real alternative and that alternative is being provided right here in Pennsylvania.
Pennsylvania can, and should, show Washington the way by passing HB 301.
T. Boone Pickens is chairman and CEO of BP Capital, a hedge fund that trades in energy equities and commodities, and architect of the Pickens Plan, an energy plan for America.