One on One with T. Boone Pickens, CEO of BP Capital
Tuesday, July 08, 2008
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SUSIE GHARIB: Oil prices dropped sharply for a second consecutive session, as concerns eased over Hurricane Bertha and the strengthening of the dollar in currency markets. In New York trading, August crude futures fell $5.33, or nearly 4 percent, to $136.04 a barrel. Prices haven't been that low since June 26th. Despite the drop, the government said today it expects gasoline to remain above $4 a gallon for the rest of the year. The U.S. Energy Information Administration also predicted regular gasoline will average $4.06 next year. Those high energy prices are why legendary Texas oilman T. Boone Pickens announced today a national energy plan to reduce U.S. dependence on foreign oil. The so-called "Pickens plan" calls for investing in a network of wind farms providing power, and using natural gas as a transportation fuel. The billionaire investor is also bankrolling a huge multimedia ad campaign to get his message out to the American public. And joining us now, T. Boone Pickens, CEO of his own oil and gas investment firm, BP Capital. Mr. Pickens, welcome to NIGHTLY BUSINESS REPORT.
T. BOONE PICKENS, CEO, BP CAPITAL: Thank you, Susie.
GHARIB: You know, we hear about a lot of energy proposals and what to do so solve this energy crisis. Are your goals really reachable?
PICKENS: Well, I'm spending a lot of money to tell the story. I have spent a lot of time developing the plan, and the plan very clearly is to reduce the $700 billion that we are paying out for foreign oil. We can't do that for very long. We're going to break the country if we do. And...
GHARIB: Let's say ...
PICKENS: OK, one point. One point. We're importing almost 70 percent of the oil that we use now.
GHARIB: Let's say that the U.S. does adopt your plan to use compressed natural gas to power up cars and trucks. How much would it cost to transform gasoline stations to using compressed natural gas and how quickly could that be done?
PICKENS: Well, one plan I saw last week was to take 25,000 existing stations, add a natural gas fueling island in them at a cost of $400,000 each, which would be $10 billion to do 25,000 stations. Not a very big number when you are paying $700 billion for imported oil.
GHARIB: What do you have to do to get American consumers onboard with this? Because Honda, for example, does make a version of a Civic car that uses compressed natural gas, but there isn't exactly a waiting list to buy the car. What has to be done to get American consumers to...
PICKENS: I think you have got to get -- you have got to get leadership into it. And I think if the American people know what we're paying for imported oil, and realizes that the imported oil is one of the reasons -- probably the most important reason why the economy is now going down, and I think that you would find that the American people would like to be a part of that. And I see it almost like, you know, we are at war. And that we have to get away from this stranglehold on the economy and on our country. So, we join together, and we can -- we can rally. The American people can rally when they have a leader and they know what the cause is, and they believe the cause is worth rallying for.
GHARIB: All right. When you say that we have to get together, today you offered up your plan. But do you think it's going to take multiple plans to get the U.S. independent of foreign oil? Do you support other plans to solve the energy crisis?
PICKENS: This plan is the only one that I have seen that actually will get into it with big numbers. And what I'm proposing to do is that you develop your wind power, which is so important to the nation, and we have tremendous -- tremendous wind resource in the middle part of the United States, from Texas to Canada. And you could develop the wind power there. And take the natural gas off of power generation, use it for transportation fuel, and reduce the -- you could reduce our imports by 38 percent.
GHARIB: You've been in the oil business for a long time, so I do have to ask you what your forecast is for oil prices. Where -- how high do you see oil prices going? How high do you see gasoline prices going?
PICKENS: Well, gasoline prices have now gone to the point where we have killed some demand in the United States, about a million barrels a day. The unfortunate part of that, the reason why you don't see gasoline prices go down is because a million barrels that we killed with price has been picked up by the Chinese. So, you're in a global market that has 85 million barrels a day in it. Demand is 86.4 million barrels. So, supply does not cover demand. And until the price goes higher and kills more demand, you're going to see oil prices go up. I think you will see $150 a barrel before the first of the year, and it will go up even further in '09, unless we have a global recession. And that very well could happen with oil prices where they are.
GHARIB: All right. Well, we're going to have to leave it there. Thank you so much, Mr. Pickens, for coming on our program. We really, really appreciate it.
PICKENS: Thank you.
GHARIB: My guest tonight, T. Boone Pickens, CEO of BP Capital.
