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Earlier this week, T. Boone Pickens, the 81-year-old Chairman of BP Capital, appeared on CNBC’s Squawk Box to discuss the progress of the “Pickens Plan.”

Readers might remember it was during the heat of the Presidential campaign last summer, on July 8, that Pickens began his own campaign to wean the nation off of foreign oil.

Spending his own money, he bought time on the major networks and mobilized an “army” of believers in order to get the word out about the dangers of continued dependence on foreign oil.

Essentially, the Pickens Plan seeks to reduce the nation’s dependence on foreign oil with a combination of wind-generated power and natural gas powered vehicles. In the process, the need for foreign oil is drastically reduced or eliminated in as little as 10 years.

His timing - with oil prices hovering around $150 a barrel - got him a lot of attention. He spent time last August meeting with both McCain and Obama in hopes that - regardless of the election’s outcome - the victor would understand the magnitude of the problem and get behind an energy plan for the United States.

In the last 12 months, to his credit no other plan has been articulated as clearly and succinctly as Pickens’ has.

Now it’s one year later: Obama is President, oil prices are less than half of what they were a year ago, and the country is sliding deeper into recession. Is shutting off foreign oil still a concern? Have we made any progress in doing so? Are we any closer to a national energy plan?

The short answers are definitely yes, yes and almost. Let me explain:

Still at the Mercy and Whims of Whackos…

While the price of oil has come down dramatically in the last year, our dependency on foreign oil is as great as it ever was. We still get over 70% of our oil from other countries, and it’s a huge security issue.

While the transfer of wealth - dollars out for oil in - is less, it’s still a huge net outflow of nearly $400 billion annually.

There’s no question that keeping that money here will not only have a positive effect on our trade balance, it’ll make a huge difference in the U.S. economy… a “free” $400 billion annual stimulus package, if you will.

Alternatively, according to Boone, “If we go 10 more years with no plan, we’ll be importing 75% of our oil and it will cost us $300 a barrel.”

Even if he’s wrong by 50% - which is unlikely given increasing world demand - it’s still a big problem. So how do we get rid of the rogues?

Closing the Door on OPEC: Light at the End of the Tunnel

In terms of our progress in displacing foreign oil, there’s only one quick way to do it: replace it with natural gas. Just a few weeks ago, the Potential Gas Committee - the nation’s authority on natural gas supplies - issued a report that shows a substantial increase in natural gas reserves here in the United States.

The report indicated that the nation’s gas reserves increased 25% to 2,074 trillion cubic feet (tcf) from 1,532 tcf in 2006 - the last time the report was issued.

This was the largest increase in the 44-year history of the committee, and its language was reflective of that fact: “[The report] shows an exceptionally strong and optimistic gas supply picture for the nation.”

That’s an understatement: At 2030 projected U.S. consumption rates of about 25 tcf, that’s nearly a 100-year supply, and it pegs the U.S. reserves as the largest in the world.

John B. Curtis, a geology professor at the Colorado School of Mines and the report’s principal author, said, “New and advanced exploration, well drilling and completion technologies are allowing us increasingly better access to domestic gas resources - especially unconventional gas - which, not that long ago, were considered impractical or uneconomical to pursue.”

The findings have shifted the focus onto natural gas as a possible transition fuel as we move from coal and oil to solar, wind, geothermal and other non-carbon sources of power. It couldn’t have come at a more opportune time.

Moving Towards a National Energy Plan: Slowly

As I’ve often said in previous articles, the best thing the government can do to move us away from fossil fuels is to provide funding and tax incentives to develop and use something else (and then get the hell out of the way). It appears as though Congress is trying to do just that with natural gas.

H.R. 1835, known as the “New Alternative Transportation to Give Americans Solutions Act of 2009,” amends the Internal Revenue Code of 1986 to create jobs and encourage alternative energy investments.

Here are the highlights from www.gotrac.us on what this act does:

  • An excise tax credit through 2027 for alternative fuels and motor vehicles involving compressed or liquefied natural gas (LNG).
  • An income tax credit through 2027 for vehicles powered by compressed or LNG.
  • A new tax credit for the production of vehicles fueled by natural gas or LNG.
  • A tax credit for alternative fuel vehicle refueling property expenditures for refueling property relating to compressed or LNG and allow an increased credit for such property.
  • Requires 50% of all new vehicles purchased or placed in service by the U.S. government by December 31, 2014, to be capable of operating on compressed or LNG.
  • Authorizes the Secretary of Energy to make grants to manufacturers of light and heavy-duty natural gas vehicles for the development of engines that reduce emissions, improve performance and efficiency, and lower cost.

Now before I get a dozen e-mails pointing out that natural gas is just a different fossil fuel, let me head them off. There’s no argument there.

However, it’s much cleaner burning, produces less carbon emissions and, most importantly, it’s found here in abundance. It’s a walk in the park to produce new cars and trucks that run on it, and convert older ones as well.

And if it helps free of the grip of rogue nations around the world in 10 years or less, then I’m all for it. We’ll all be better off economically, and we’ll all have greater piece of mind.

How do you play it? Take a look at Clean Energy Fuels Corporation (Nasdaq: CLNE), a provider of natural gas as a vehicle fuel, primarily for fleet use in the United States and Canada. It designs, builds and operates natural gas fueling stations, and provides financing for natural gas vehicles. It and others in the sector will undoubtedly benefit from this legislation when it’s passed.

Next week, I’m going to take a look at the state of the wind power industry, and why it’s currently in stall mode.

Source: The Pickens Plan: Where Are We One Year Later?