In this ad (at 24 seconds), T. Boone Pickens calls U.S. oil imports "the largest transfer of wealth in the history of mankind." Wrong--it's not a transfer a la welfare or the tax goodies that Pickens wants to fund his plan (more about this--including a bootleggers and Baptists angle--is below the fold), it's a mutually beneficial voluntary exchange. That is, we get something valuable--OIL!--in return for the $700 billion. It's true that we get much less consumer surplus from trades at $140 per barrel rather than, say, $60 per barrel; it's also true that at $140 per barrel we find some activities are no longer economically worthwhile (e.g., we're driving less and airlines are reducing their flight schedules). Am I oversimplifying or ignoring something important (e.g., we buy much oil from odious regimes or Mankiw's Pigou Club concerns)? Probably, but I doubt they'd change my point that imported oil is an exchange not a transfer. In return for the $700 billion (or, more precisely, the goods and services that can be bought with the $700 billion) we get a commodity that can be used for everything from making plastics to fueling family vacations.

I'll leave it to others to explain the concept of emergent order to Mr. "I have a Plan" Pickens.

NB--This WSJ op-ed also contains Pickens's bit about buying foreign oil being a wealth transfer and his call for wind power subsidies.

From a USA Today article:

Washington, Pickens adds, can encourage the move to natural-gas-powered vehicles by providing modest economic incentives for fuel retailers to invest in CNG pumps at their stations, for automakers to build CNG-powered cars and for individuals to convert their existing vehicles to CNG use. And it should continue to provide tax incentives for another 10 years to encourage wind energy's rapid development as part of an overall plan to wean the nation from foreign oil, he says.

"It certainly would be cheaper than what they're doing already for nuclear," Pickens adds. But he's also in favor of developing more nuclear energy, and every form of alternative energy to reduce oil imports. "Try everything. Do everything. Nuclear. Biomass. Coal. Solar. You name it. I support them all," he says. "But there's only one energy source that can dramatically reduce the amount of oil we have to import each year, and that's (natural) gas."

Pickens is an outspoken believer in the so-called peak oil theory that holds that maximum world production has peaked at about 85 million barrels a day — vs. current demand of about 86 million barrels a day — and will never rise much above that even with lots of new drilling and production.

"Even people who continue driving gasoline-powered cars and trucks will benefit" from his plan, he says.

Critics could easily accuse Pickens of advocating a major new public policy initiative that will line his own pockets. He is, after all, a big player in both the wind power and natural gas businesses. Pickens says while his hedge fund will earn money for its investors, earning more money personally is meaningless: "I'm 80 years old and have $4 billion. I don't need any more money."