Pickens Plan might be boon to US

Legislators to review proposal to subsidise natural gas-fuelled lorries.

T Boone Pickens stands to gain financially from increased use of natural gas in America.

The so-called Pickens Plan, a subsidy scheme that could cut total American oil imports by almost 10 per cent by targeting lorry fleets, will reach Congress for a vote this month, according to US Senate leaders. The proposal would create tax incentives for transport companies to modify lorries and buses to run on natural gas instead of diesel. It would go to the Senate as part of a larger bill to promote renewable energy and reduce emissions of greenhouse gases. The measure's principal supporter is T Boone Pickens, the Texas billionaire who claims it would reduce oil imports from OPEC states by up to 25 per cent over two decades. If the tax incentives work as advertised, the measure would accelerate the shrinking of the world's biggest oil market that began two years ago and is expected to continue next year.

Harry Reid, the Democratic Senate majority leader, told reporters on Wednesday in reference to a version of Mr Pickens's plan: "Almost certainly I'm going to put that provision in the bill. We plan to do something with natural gas." Mr Reid and the White House hope to bring the full energy bill to a vote by the end of the month, but it faces uncertain prospects. The proposal to shift lorries to natural gas enjoys broad support from both political parties, but other measures in the bill to cap US carbon emissions remain staunchly opposed by Republicans and some Democrats, even after they have been scaled back.

Industry experts have questioned whether the Pickens proposal is economically feasible in the near term and stressed that policy should first target short-range delivery vehicles that drive on set routes. A benchmark report on the US gas industry by the Massachusetts Institute of Technology says it is "unlikely in the near term" that the use of compressed natural gas-powered vehicles in the US transport sector "will develop into a major new market for gas or make a substantial impact in reducing US oil dependence".

The report was published last month. "Liquefied natural gas does not currently appear to be economically attractive as a fuel for long-haul trucks because of cost and operational issues." The Pickens Plan to steer the country's massive gas reserves into the transport sector has in two years become a fixture of American energy politics after an intensive lobbying and advertising campaign. Mr Pickens, who owns a large stake in a natural gas fuel company and stands to benefit financially from the new subsidies, has exploited popular suspicions of the Middle East to argue for the proposal.

He has on several occasions insinuated that some of the US dollars spent to import about 5 million barrels per day (bpd) of oil from OPEC states have gone to Islamic militants and other anti-American interests. That message has struck a chord in both political parties and even President Barack Obama, who has made improving US ties with the Middle East a key part of his foreign policy, promised during his election campaign in 2008 to end US oil imports from the Middle East within a decade.

The US imported just over 2.6 million bpd from the Middle East in April, the latest month for which statistics were available from the Energy Information Agency. The country's top three suppliers were Canada, Mexico and Saudi Arabia, with no oil coming from the UAE. * with Dow Jones @Email:[e-mail]