Billionaire Grudge Match: Behind the T. Boone Pickens vs. Koch Brothers Fracas

Last Updated May 25, 2011 3:50 PM EDT

Texas oil billionaire T. Boone Pickens is convinced Charles and David Koch -- owners of the industrial conglomerate Koch Industries -- have been up to their knickers in unscrupulous backroom lobbying against his natural gas bill. How could two brothers whose private enterprise is loaded with oil and ethanol holdings be so cruel to natural gas? Inconceivable!

The public fight has been couched as a symbolic battle between free enterprisers and those pinko-commie subsidy lovers. But it's really a good old-fashioned turf war. Or put more plainly: It's old-school oil versus newcomer natural gas in a fight over which commodity will fuel our cars and trucks.


The players In one corner you have Pickens, who has been lobbying Congress for years to pass legislation that will wean the U.S. off of foreign oil. The Pickens Plan aims to make natural gas a transportation fuel (which would presumably supplant oil as the go-to choice) and use wind power for electricity. The wind part has dropped off considerably.

Pickens is still gung-ho for natural gas and is pushing passage of the New Alternative Transportation to Give Americans Solutions Act, or NAT GAS Act, recently introduced legislation that would provide tax incentives to buyers and makers of natural gas-powered vehicles.


In the other corner are the free-enterprising Koch brothers. The Koch Industries owners -- who have happily played the role of economic freedom fighters -- have openly criticized government subsidies, including those for clean energy and natural gas.

They're no dummies. Recent editorials allegedly penned by Charles Koch make sure to note the company is involved in ethanol, a federally subsidized fuel. Koch offers up a weak explanation. You see, we oppose subsidies, even for ethanol, but the government mandates its use, so we might as well be competitive. Right?

Let's be clear -- Koch wasn't dragged kicking and screaming into ethanol. Koch Industries' refining and chemical unit Flint Hills Resources bought four ethanol plants in Iowa in recent months, purchase the company praises in a press release. In all, the company buys and markets about one-tenth of all ethanol produced in the United States.

The root of the fight
The Kochs may insist that it's about subsidies. But it goes a little deeper than that. It's about subsidies for a fuel that would compete directly against oil. The tax incentives would encourage:
  • Gas retailers to invest in natural gas pumps
  • Automakers to build natural gas-powered cars
  • Consumers to buy natural gas-powered cars
This doesn't exactly make refiners happy, even though it would take decades for natural gas to supplant gasoline as a transportation fuel. Oil refiners, which make diesel, gasoline and other fuel products, already feel the looming threat over electric vehicles. They'd gladly like to avoid another competitor.

Photo from Flickr user Tarter Time Photography, CC 2.0

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