A Fuel Debate Between T. Boone Pickens vs. Fred Smith

By Ucilia Wang

For a while, T. Boone Pickens stood out as a business tycoon who made his fortune on oil but became a true believer in using less of it and more natural gas (and wind energy). He won over many politicians and environmental activists as fans and faced few public challenges.

Not anymore.

As the new administration takes power and intends to pass all sorts of policies on renewable power generation and energy-efficient transportation, more business hot shots are making their views known. And they don’t think much of Pickens’ plan.

FedEx’s (FDX) CEO Fred Smith is one of them. Smith thinks using natural gas is not much better than using oil, and has embraced hybrid diesel-electric technology instead, noted the Wall Street Journal’s Environmental Capital blog Friday. FedEx has 80,000 hybrid diesel-electric trucks, the largest fleet in the country.

FedEx’s director of sustainability, Mitch Jackson, penned a blog post last Sunday where he argued that substituting one non-renewable fuel source with another isn’t the answer. Rather, the country should invest in cars powered partly or wholly by electricity generated from cleaner sources (i.e., solar and wind).

Jackson also argued that although diesel is made from crude oil, it burns more efficiently than natural gas.

Jackson wrote:

Diesel usage has better fuel efficiency than these other fuels, which translates to lower carbon, or greenhouse gas, emissions as well. Any replacement fuel needs to improve the nation’s fuel economy from where we are today.

Pickens didn’t take the criticism lightly and took to his blog to defend his position. Pickens said Jackson needed to “do more homework” before making his argument against natural gas. Pickens added that diesel fuel isn’t as attractive as Jackson has portrayed it to be:

According to the California’s Air Resources Board and Energy Commission, the carbon content of diesel fuel is almost thirty percent higher than domestic natural gas and less than one percent lower in carbon content than gasoline.

Europe has taken to diesel-powered passenger cars while the United States has relegated diesel largely to large trucks. U.S. politicians have been gung ho about using ethanol to replace oil, but their plan hasn’t worked out so well. Corn ethanol has been vilified, and companies that want to make ethanol from non-food sources, such as switchgrass and algae, have yet to make it in commercial quantities.

President-elect Barack Obama is keen on promoting fuel-efficient cars. But who will he listen to: Pickens or Smith? Or both?

Comments

[bosun.j:]

Though Fred Smith is a disgusting anti-worker scumbag I must say that his position on hybrid is more sustainable. Picken's plan should be utilized during the run up to greater hybrid penetration. IMHO

Jan 11 08:02 AM

[finmah@yaho...:]

first we need to check with the scholars of green movement and ask them if it is okay to actually increase the range of driving for a given carbon print using hybrid (well it depends on the power plant transformation as well). In either case -with gas or diesel it is possible to increase the economy of driving for the future. But I don't see talking heads normally holed up in coastal metro areas ready to honor an increase in energy efficiency since they will lose control over car manuf designs. With increased efficiency one might still buy an SUV.

Both plans have too much sense as a migration to better tech down the road though diesel is really overhyped particularly with other collateral air issues. In pickens plan one cell tower is fought over in certain towns -here we are going to ridge the most majestic mountains in the Rocky mtns for thousands of miles - not butying that they will be hidden in only valleys -ask other environ groups.

Nobody mentions if we do allow draconian carbon taxes to establish we effectively will be writing down our own proven and unproven reserves in oil and gas in the US - sounds like a massive massive trillion dollar hit to the oil industry and US treasury and our future generations. We never gave our industry the chance to establish a sovereign wealth fund like other oil producing nations where many generations are enriched by slowing oil develop in other nations through cartel pricing and praising global warming to foreigners and drilling like mad in their waters.

Jan 11 09:07 AM

[User 335422:]

Natural gas is the ONLY way to go to distance ourselves from foreign imports. Not only is it clean, it is abundant in the US, and the infrastructure is much more in place than any other alternative.

Jan 11 09:45 PM

[user 339275:]

The author should check their facts before they write Fed-EX does not even own 80000 trucks total and there are not 80000 diesel hybrid delivery trucks total in the U.S.

Jan 12 12:34 AM

[fran:]

another author with inadequate knowledge of fuel options, application factors, and what the people like smith, pickens, and others have said at detail level. poor grasp of facts, generalities, shallow analysis.

are all "greentech media" articles represented herein? if so, don't bother. you're a disservice to people searching for an understanding of issues.

Jan 12 10:38 AM

[Stockguy456:]

Boone gets the ideas and is a visionary! He says long term hydrogen is the best option (long term)!

Jan 12 10:59 AM

[Paul Killinger:]

It's becoming clear now where all this is headed. NO country in the history of the world has ever thrived economically without utilizing its own domestic abundant energy. By comparison, the group coming into power now in Washington is going to make Jimmy Carter look like Ronald Reagan.

Jan 12 11:44 AM

[Paul Killinger:]

And if Fed-Ex has a fleet of 80,000 hybrid diesels, I'm a monkey's uncle (not the other way around).

Meanwhile, Wal-Mart and other long haul carriers are coverting their fleets to use LNG. Electric vehicles are worthless for their purposes.

So in the end it will be a COMBINATION of new transportation fuel technologies that reduce our dependence on foreign oil. (Although someone alot smarter than Fred Smith will have to explain to me how burning more diesel (the most expensive part of a barrel of oil) helps achieve that exactly.

The Pickens Plan will remain alive and well with or without the blessing of the new Administration. It's major advantage is it's our ONLY viable alternative to importing more foreign oil.

Jan 12 12:11 PM

[User 330713:]

Months ago, I notice a story buried deep within my local newspaper about the new clean diesel engines emitting a lot less (if any at all) visible soot. But, it mentioned the clean diesel (using petro - or bio-diesel) still emit nano sized particles of soot that sticks in people's lungs and can not get "coughed out." This can cause many respiratory problems. I would like to see much more written on this potential (with a country full of diesel cars and trucks) major health problem.

Jan 12 04:34 PM

[Dixie Dawg:]

You may have noticed the recent ads for the BMW 335d portraying how far one can go and how much less of an environmental impact it is to drive the high efficiency diesel models, so these are now being marketed to everyday drivers as alternatives to hybrids (which sales of in the US are waaay down ). I can only imagine that the hopes of OPEC are linked to the success of these efforts, and wonder if they've invested in BMW and other diesel related companies to promote the continued use of their "product".

I believe Pickens has said from the beginning that his plan was a bridge measure to reduce our dependence on foreign oil until alternate renewable sources are available to come online in the next 50 years or so. OPEC and other oil economy-based nations will feel the brunt of this change over, since there's really no other industries in many of these nations (and frankly "they" don't produce the oil, they happen to live on top of these resources that initially US & European companies discovered, developed and marketed to the world).

Shifting locally produced LNG to auto use and reducing the oil imports is something that Exxon/Mobil and other corporations should embrace now to support the largest consumer base (and probably the most stable and productive economy) in the world as well as reducing the influence and control of OPEC on their bottom line.

The Pickens Plan is a threat to OPEC/Russia, if followed through on, so watch what happens soon in Washington (anyone remember ABSCAM and how easily Senators and Congressmen take money from oil sheiks? Now what if they ask for "No" votes on renewables...?)

Also, a pet peeve of mine is the "importation of foreign oil". Correct me if I'm wrong, but domestically produced oil essentially goes into the same "pot" as oil from Venezuela & Russia and Africa, correct? US produced oil can be purchased by companies in India, China or Cleveland, OH for refining, correct? "Drill, baby, drill" was a failure for the Republicans not because of the environmental issues, but because the voters understood this basic fact and any "new" oil discovery and pumped from ANWAR or the Gulf of Mexico wans't just for the US's direct benefit. What's been framed as a national defense issue is really an energy defense issue, and the OVERALL reduction of oil usage is what Pickens Plan offers, it just happens that 70% (+/-) of that oil comes from overseas due to our demand outstripping our "local" supply.

Jan 15 06:22 PM

[Argle Bargle:]

With regard to diesel-electric hybrids, expanding biodiesel production should mitigate domestic source arguments, especially if biodiesel carries less sulfur than petrodiesel. The technology is not unheard of: Locomotives are diesel-electric.
Delivery vehicles (FedEx) have different requirements than long-haul (Wal-Mart) trucks. This is not an either/or choice. Pissing contests help little.

Jan 15 07:33 PM

[Matthew LaG...:]

How can you say Mr. Fred Smith is a disgusting anti-worker scumbag? First of all, that is a very immature way to express yourself. Second, anyone who has followed Mr. Smith's work ethic and grit to work his butt off even when people told him he was wasting his time knows that he is definately not "anti-working". And third, what other trucking company has previously given not only their management, but their entire workforce including dockmen and drivers an annual and quarterly bonus? There very well may be another company, but not that I am aware of, and I know that Yellow or Roadway would not and have not given their "labor" workforce any bonuses. We all know that unions are the "anti-workers" of this industry, and if YRC doesn't show you that, then I don't know what will. While a union member tells you to "slow down, save some work for the next guy", a FedEx worker is saying let's get it done, let's service our customers, let's do right things right. That type of attitude comes from the top, and the top of FedEx is Mr. Fred Smith. I have been fortunate enough to see both sides, and I would honestly not take a one year union contract worth a million dollars. I worked the union for 7 years, and I was miserable the entire time. I was an outcast because I worked my butt off. That is an obvious problem, and a stock price today of $2.88 for YRC, and over $58.00 when Yellow and Roadway merged should tell you who has the "anti-working" attitude. Thank You



On Jan 11 08:02 AM bosun.j wrote:

> Though Fred Smith is a disgusting anti-worker scumbag I must say
> that his position on hybrid is more sustainable. Picken's plan should
> be utilized during the run up to greater hybrid penetration. IMHO

Jan 30 07:33 PM