A couple of days ago, I had an interesting conversation with an acquaintance who had recently presented his concept for right-sized reactors directly to T. Boone Pickens, one of the most prominent promoters of American “energy independence”. He shared a very interesting story about Pickens’s reaction to the several hour long presentation and following discussion. He described the setting for the meeting as a large, well appointed room with huge displays tracking the behavior of natural gas markets.
After he made his presentation, Pickens, who paid close attention to both the presentation and the displays, made the following comment. “In the time that we have been sitting here, I made $50 million. Can your reactors do that for me?” (The $50 million he was talking about came as a result of the change in the price of natural gas during the meeting.)
This reaction illustrates the difference between investing in nuclear energy and trading a commodity like natural gas. Nuclear energy investments do not lend themselves to making a killing in the market; they are long term investments that may eventually pay large and steady dividends in the form of reliable, useful electricity or heat for many decades.
People who like the opportunity for massive quantities of quick money may have better luck in Las Vegas or in the commodity trading pits, but they also need to be ready to lose money just as quickly. Of course, if they own the casino or have enough influence to change the trading conditions, they might improve their chances of a more secure payoff.
I did a bit of googling this morning to find out that there is a bill working its way through the legislative process called The Natural Gas Act. Not surprisingly, T. Boone Pickens is one of the people who is actively working to encourage passage of that act, since it will help to support both the price and physical sales volume of natural gas by adding incentives for increased use. (See, for example, BusinessInsider.com’s April 2, 2010 article titled The Taxpayer’s Big Gift To T. Boone Pickens Has A “Real Chance” Of Coming By May or the Houston Chronicle’s February 28, 2010 article titled Pickens expects approval of key natural gas plan.)
Pickens gets a lot of fawning attention from both the press and from politicians. I have even seen flag officers who are entranced by his seemingly visionary whiteboard discussions. They believe him when he claims patriotism as his motive in aggressively promoting his energy plan. Perhaps they are right, but perhaps they are also looking through green tinted glasses made possible by the $60 million or so in advertising and undisclosed quantities of political contributions.
The reaction that Pickens gave to my friend’s presentation leads me to believe that making quick financial returns on the variations in the price of natural gas is a stronger motivator than making investments that will lead to long term energy security for the United States of America. There is nothing wrong with making money by developing and building superior products that serve human needs. Making money by rigging a trading game seems less admirable, especially when the source of the money flowing to the manipulating players is from all of the other participants in the game.