As T. Boone Pickens prepares for his second visit with Steve Forbes, we analyze why his plan to harness the wind went awry.
A lot has happened since we taped our interview with billionaire oil and wind tycoon T. Boone Pickens on our show "Intelligent Investing With Steve Forbes" Sept. 2, 2008. Unfortunately, not much of it was good. (See: "Steve Forbes Picks Apart The Pickens Plan.") Now, in honor of his upcoming second visit with Steve Forbes we revisit what happened to T. Boone Pickens and his plan. (See: "Next Week's Guest: T. Boone Pickens.")
In the summer and fall of 2008, Pickens was busy stumping his "Pickens Plan" to wean America off its dependence on foreign oil, and partly fill this energy void with wind. He put his money where his mouth was, spending $2 billion to buy 687 wind turbines from General Electric ( GE - news - people ). The idea was to exploit North America's great wind column, which stretches through the heart of the land from Texas through Canada. This strip of land is, Pickens said, the Saudi Arabia of wind. His plan was to generate 4,000 megawatts of power, the equivalent of two nuclear plants.
It seemed the time was as right as it was going to get. In mid-July 2008, oil peaked at $134.44 per barrel, according to the U.S. Energy ( USEG - news - people ) Information Administration (EIA). By the time we taped our interview, oil had deflated somewhat, to $105.26, but this was still historically high and the nation seemed ready for alternative fuels. Pickens, in turn, seemed poised to go from oil wildcatter to wind wildcatter, and refashion himself as both a visionary businessman and environmental hero.
It didn't happen. Why?The most obvious answer is that oil got very cheap, very fast. It fell from its all-time high to a recent bottom of $31.76 (all barrel price quotes are from the EIA), by Jan. 1, 2009. This was a decrease of 76% in just under seven months. This alone was virtually fatal to Pickens' plan. As he told Steve Forbes his plan worked under the assumption that oil would say over $80 a barrel, because most of the major discoveries had happened....MORE