T. Boone Pickens


An 80 year-old billionaire Texas oilman, he's got a plan -- The Pickens Plan -- for ending America's dependence on foreign oil by converting North America's huge natural gas supplies into fuel for cars and trucks. He's also betting on wind power, investing $10 billion to build the world's biggest wind farm in the Texas panhandle. This is an edited transcript of an interview conducted on March 12, 2008.

“The leadership has got to come to the surface at some point and explain to the people what we're facing.”

So you're in the fossil fuel business. You're an oilman --


Geologist. And you're told that your product, oil, is being burned and causing CO2 to go in the atmosphere. How does that hit you?

You know, as a geologist, you do think in geologic time, [where] you're dealing in millions of years that clearly show that you went through an ice age that lasts so many thousands of years, and you went through drought, and you went through heat periods. ... But the question that it comes down to [for] me is, have we just emitted enough to tip the balance in the wrong direction?

And you don't know the answer to that?

I don't know the answer. I have geologist friends that say: "Pickens, what in the hell are you talking about? Global warming -- it's nothing more than things that we've seen in the past." I said, "Yeah, in the past, we didn't have the same structure that we do today as far as the emissions coming from coal and everything else."

They don't agree with me on it. But my point is, look, if I'm right, then we need to do everything we can to help our situation globally. If I'm wrong, what have we done to hurt ourselves? Nothing. We've wasted our time maybe. And if we're just dealing with a cycle that would have occurred whether we had been emitting what we have into the atmosphere or not, we would have had this cycle come up. If that's the case, we haven't hurt ourselves. And there's no question we've helped ourselves if there is a problem.

What about the argument that it's going to hurt us economically if we start putting a lot of money into projects that we don't need to be putting money into?

Well, we can figure that out. We're all smart enough in business and all to be able to. But there's no way that anybody's going to look at a plant that's belching black smoke -- it's wrong. And I go back to the '60s, 50 years ago, [when I] drove by carbon black plants that were burning natural gas to make carbon black. It was unbelievable the black soot that came out of those. Well, they don't have those anymore. They realized what they were doing was horrible, and they fixed it.

And it's the same thing around the world. I was in Beijing in July -- that's worse than Los Angeles at the worst period. Well, what's happened to Los Angeles? They've cleaned it up. So we know we can change what we're doing to the atmosphere.

What about the argument that we need to get off fossil fuels because they're going to run out?

That's not a bad argument. I do believe that oil production globally has peaked at 85 million barrels. And I've been very vocal about it. And what happens? The demand continues to rise. The only way you can possibly kill demand is with price. So the price of oil, gasoline, has to go up to kill the demand. Otherwise, keep the price down, the demand rises.

So it absolutely won't work unless you can create something that fills the void as far as fuel is concerned. I think we should go to all the alternatives that we possibly can, because we're going to need all the oil at 85 million barrels a day. And with demand going up, you're going to have to bring something else into the equation.

You're going to have to get serious about what we're going to do to take care of the problem.

What does "being serious" mean?

The leadership has got to come to the surface at some point and explain to the people what we're facing. One fact: 65 percent of the oil you use every day in the United States is imported, and you're sending out $1.3 billion a day for that. That oil comes in, and in 24, 25 days, it is burned up in the system in the United States. And what do you get for it? You get 24, 25 days of transportation around the country. Is that worth it? And that's the story of oil around the world.

So the Democratic candidates are talking about between 60 and 80 percent reduction in CO2 emissions. Do you have any idea how that's possible?

No. I don't think they do either. Somebody put it up in front of them, and they read it off.

Well, they've gotten legislation going through the Congress that calls for this.

They may call for it, but every candidate for president since I can remember -- back to the early '70s -- said, "Elect me, and we'll be energy-independent." Not one candidate from that time to this time has ever reduced the dependency on foreign oil. They've increased the dependency. They've all failed because none of them understood what they said.

But on the problem of carbon emissions, how are we going to address that?

Well, you're going to have some kind of carbon legislation. And it will be clumsy, won't be perfect. There's no question about that, because it's complicated. So it will have to be adjusted into the future. But we're going to have to get out there and do something and try to stop what we're doing.

In the transport sector, what do you think looks best for replacing oil?

Our dependency is so extreme I don't think anybody can say we can accomplish that unless they're saying in 100 years or 50 years we've got to get off of oil.

But the best transportation fuel you can have, which has been totally stymied by the automobile and oil companies in America, is natural gas. Natural gas is the best transportation fuel. It's better than gasoline or diesel. It's cleaner, it's cheaper, and it's domestic. Natural gas is 97 percent domestic fuel, North America.

In terms of emissions, how does it compare to ethanol?

Natural gas would be probably 50 to 75 percent cleaner than ethanol.

Why haven't we invested more in natural gas vehicles?

Well, the major oil companies, the marketers of gasoline, they don't want to change what they're doing. And what they're doing is done well. I'm not being critical of them. It's just a culture that has to be changed when you do it.

Is it about money? Is it about building new grids and pipes?

No. Natural gas is better distributed than any other fuel in the United States. It's down every street and up every alley. There's a pipeline. So the natural gas is available everywhere. They say, "Well, you're going to have to build stations, and they're going to have to have compressors to do it, and you're going to have to change engines in the cars and everything else."

To me that's not a government cost -- leave that up to industry. Just get industry behind what you're doing, and it all works because natural gas is cleaner, cheaper, and it's a domestic fuel.

But you're saying that the reason that the oil companies won't invest in this is just cultural and habit?

Well, I met with them in 1997, so we're talking about 10 years ago or more, and it was a good, healthy discussion.

This was a major oil company?

Yeah. And I said, "Fellas, I think natural gas should move to transportation fuel." And they said, "Well, you're not up to speed on technology." And I said, "Well, we're getting awful close, and if everybody will focus on it, it can be solved very quickly." They said, "Well, we'll see." And I said, "Well, are you going to be against me?" And they said, "No." And they said, "If you're successful, we'll buy you out."

And that was the end of the discussion. But they didn't want to make a change in the way they operated. It didn't suit their purpose. And you go to the automobile manufacturers, all of them. And the last one [I] met with was Chrysler a year ago, and they said, "Well, we've decided to go with diesel." I said, "Diesel -- it will be more expensive than gasoline!" They said, "Well, we just don't see it that way." So where are we now? We're at $4.50 on diesel.

[Editor's note: Pickens' interview was conducted before the surge in gas and diesel prices: in June 2008, diesel topped $5/gallon in California, and hovered near that price elsewhere in the country.]

You can't put natural gas in an ordinary gasoline-burning car, can you?

No, you'd have to make some changes, which I'm not really big on making changes in passenger cars. I think that the place where it's serving very well now is using natural gas, LNG [liquefied natural gas] or compressed natural gas in fleets.

On buses.



Seventy-five percent of the buses in Los Angeles are natural gas. I was in Beijing in July last year, and 4,000 buses, the largest fleet of buses in the world, are on natural gas. They wanted me to come to China and put in natural gas fueling stations.

The reason they wanted me to come -- I got to bring my natural gas with me. They don't have enough natural gas in that country to support something of that magnitude, which is great in a country like Peru. Peru has a great amount of natural gas.

So you think this would be a good idea. We'd cut carbon emissions by 50 to 75 percent right there.

That's right.

So I don't understand why it's not being done.

It's not being done because of leadership. That's why most things aren't being done.

Political leadership or business leadership?


Why don't we have leadership on an issue that everybody, if you press them, agrees is one of the most serious issues of our time? How do you explain that?

I don't know. The business leadership probably understands how you could help our situation. The political leadership -- I just don't think they understand. They're not technically qualified. And then they have to take advice from whomever else -- their lobbyists are going to have some influence in it. And so nobody can ever quite get comfortable.

Well, if it doesn't come from Washington, if it doesn't come from legislation, is it going to just happen from business?

It will. It will, because natural gas is moving into the transportation fuel business. And I mentioned the Port of Los Angeles and Long Beach. They're switching away from diesel.

But you've got to get a company like General Motors to make a lot of new cars or Ford or Chrysler or Toyota to make natural gas cars. That takes leadership.

That's right. And Honda has been the best in this area.

So the question is, can we rely on business to help us solve this?

Sure, if you tell them that this is what has to be done: ... Either get onboard, or we're going to pass legislation that you're not going to like.

But what you're describing is a situation where Congress really isn't really up to the task at this point.

That's what I'm saying. They're not up to the task. But the interesting part of it is, this is happening around the world where countries have oil and gas, and they're developing countries. And they're switching their vehicles -- for instance, Iranians.

Why is it easier for them?

Because they don't have an infrastructure they have to support.

... All of these things are going to work. You aren't going to have any source of energy that isn't going to get a chance. And they're probably all going to work. I say "probably." You have some that are too expensive at this point. But they're getting in range all the time.

That's quite a big statement. You're saying that we're going to change our whole energy infrastructure in the next 50 to 100 years?

Yes. Definitely in 50 years. It will. I won't see it. You won't either.

Does the average citizen understand what's coming?

No. They don't want to think out that far. I mean, everything's pretty short term on thinking. But this is getting very short term. As the price of gasoline goes up and you hit $4 a gallon, things will get pretty dicey.

[Editor's note: After this interview was conducted, average gas prices rose to $4/gallon in July 2008.]

But, you know, the interesting part about gasoline is in the United States, we don't subsidize the price of gasoline. There's taxes on it. There should be more taxes on gasoline. If you want to tax something, tax gasoline. I know I'll get a half dozen nasty letters [for] saying that....

Because with those taxes, you punish the little guy who can't live downtown. He's living way out away from his job.

Right, OK. Reduce the tax for him someplace, payroll tax or something. I don't know. I'm not smart enough to figure these things out. But when you look around the world, 70 percent of all the gasoline sold every day in the world is subsidized, OK? Having said that, you've got to get the price up to kill demand.

There's no other way that I can see that you can kill demand and bring supply and demand in balance. Now, you start introducing alternatives into it. That's good. And so all of this is going to go in. Is it going to change the appearance of the energy structure? Absolutely. In 10 years I'll be able to see some of it.

Do your colleagues in the oil business see things the way you see them?

No, I don't think everybody's in agreement with me, because guys tell me they're not.

We've spent some time looking at large companies, Exxon and General Motors and the utilities and coal companies. And what you see there is huge amounts of investment in existing infrastructure. And you can't look at that and not think that there must be a tremendous amount of inertia about change.

It's hard to change when you're doing as well as they're doing. I mean, they're making a lot of money. Stockholders are happy. The price of stock is going up. It's hard to say, "Wait, let's re-look at this and see." But I think they do it all the time. I mean, they're constantly evaluating themselves in different areas. They become more and more efficient all the time, and --

But those are good efficiencies for business to make money. It's not about addressing a larger societal problem such as greenhouse gas emissions.

No. But I think they do address those.

Well, the question is, what does it take to get large businesses, who we need to change, to change, to offer alternatives?

Back to the same thing that we had 30 minutes ago. It's leadership. You have to have somebody that has the credentials and the leadership ability to come forth and say, "This is what we're up against." I'm not kidding you. This is it. And people say, "He's not kidding; this is it."

And you're not seeing any leadership?

No. I'm not seeing anybody that fully understands or appreciates the dilemma that we're in. So how's it going to go? It will unfold, and it will happen, because it will be forced into alternatives. And all will get a chance. Now, where I fall apart with my colleagues is that they say, "Pickens, you don't think there's going to be any more oil found." That's not true. Eighty-five million barrels is what I think you peaked at, and it's going to decline in about 5 million barrels a year. So the first thing you've got to do is replace that 5 million to get back to the 85. I think that can happen. I don't think you can get it over the 85.

I talk to major oil company people, and they say there's plenty of oil out there. Well, why don't you add to your production, which they're not doing? They say, "Well, we can't get to it." OK, it's in the hands of state-owned oil companies. All right, that's out, and you're never going to get a chance at that probably.

OK. Let's open up ANWR [Arctic National Wildlife Refuge] in Alaska. Let's open the Outer Continental Shelf [OCS]. Let's open federal lands in the West, and that will help us all. It's not going to do anything about 85 million, but it will help us all. There's no question. It would be in the United States. But the Democrats won't do that.

But should we be going in that direction when we've got this CO2 problem? What takes precedence here? Energy independence is an important issue, but climate change -- it kind of trumps everything, doesn't it?

I guess. But climate change is not going to be as critical as the need for more energy. Climate change will be happening.

In the short term.

In the short term, right.

In the long term?

In the long term it's a different question probably, different answer.

You've seen major oil companies dabble in some alternative energies. But you've made a much bigger play, a much bigger bet on wind. Why aren't the other oil companies following suit?

I think they all look at them. If they're not in them, they're looking at them. They're not stupid about them. I mean, Exxon's never stupid about anything. I mean, you want to talk energy with them, they'll talk any kind of energy you want to talk about.

Well, I talked to Exxon. And interestingly, they said: "Look, for the coming decades we're going to be dependent on oil and gas, and, you know, the renewables just don't make sense economically. We can't make money on them."

That's why they don't do it.

But I'll bring you back to the climate change argument. It says, look, we've got to get off of these things because we're damaging the planet.

Well, there's no question in my mind that that is going on. And so, you know, for a 79-year-old guy, I'm in here plowing away with my windmills and natural gas and all. I'm helping the deal.

Well, I'm asking you to help me understand the industry that doesn't see it the way you see it. I'm not a businessman. I'm not in the oil business. You are.

Well, if you've been looking for oil and gas your [entire] career, 25, 30, 40, 50 years like me, I can see how somebody is focused on that, and somebody comes in and says, "How about doing a deal with windmills?" Windmills? What are you talking about? That isn't my business. My business is [to] find oil and gas.

Well, I thought you were in the energy business.

You see, you're looking for oil and gas. You're not just energy. But it's the odd one that will look off that. It's probably somebody like me who spent too much money looking for oil and gas -- found a lot of it, but it got very, very tough to find in the last 20 years of my career. And I wanted to look for something else. Was it because I wanted to be clean and all? Not really. That isn't the first look I had at it. As time passed, that came into it.

So you wanted to make money?

Exactly. That's what most businessmen are going to want to do, is make money. You have to focus on I'm going out to make money is why I'm in this business, not to do good. Now, if you're lucky enough that the things that you're doing do good, then there's a nice, warm feeling about that.

So you went into the wind business to make money. How are you doing?

Haven't made any money. I went in the water business to make money, too. Haven't made any money. But I think I will make money.

Talk to me about the potential of wind. Why do you see that to be a good deal for --

Well, you just work through the numbers. You can produce wind energy for about the same price as you can do power generated by natural gas. So now you're competitive with natural gas.

Can you compete with coal?

No, you can't compete with coal. Coal is the cheapest. Right now we're on a clean feeling in America -- we don't want coal. Well, you're going to have coal, because it's the biggest natural resource America has.

As I understand it, we're going to increase our consumption of coal.

You are. But they try to slow it down and switch back to natural gas, again because natural gas got cheaper. But what's going to happen is you've got to go to your natural resources, and coal will have to be used. Natural gas is the second largest resource in America. It will be used, too. Both of them are going to be used. Everything's going to go.

Coal's got to be cleaned up. But when you clean it up, it's going to get more expensive. So ... the consumer's going to have something to say about it. They're going to say: "Wait a second, pal. I'm not as interested in clean air as you are. I'm interested in a cheaper power bill." So now you've got conflicts [as to] how this is all going to unfold.

If you can't make electricity with wind as cheaply as you can with coal, what's the benefit? Why go into it?

Well, California has passed a law that no new coal-powered generation can come into the state. So you're banking on this because you think politically we're going to be buying more wind, even if it's more expensive than coal energy?

I think so, yes, because today, if you want to sell power into California, it's going to have to be renewable and clean. They'll take natural gas power, wind -- it all gets a chance. And it's all going to get more expensive because coal is going to have to be cleaned up, and that's going to cost to do that.

But go back to the mix right now on power generation in the United States: Fifty percent of it plus is coal; 25 percent is nuke; and 20 percent is natural gas, and 5 percent hydro and everything else that goes into it. But if you gave me the assignment today -- "We need 150,000 megawatts in the next 10 years of power; tell me how would you do it" -- I would put it together in the central part of the United States. There is a model in this country that you can look at, and that's Sweetwater, Texas.

It's on the southern end of the best wind. So it's not the best wind, but it's worked there. OK, take off from Sweetwater and go north to the Canadian border, and there's a corridor there that can be wind, and better than Sweetwater wind.

So if you can duplicate the Sweetwater model all the way up through the Great Plains, you could recover that area from the standpoint that people have moved out of it, people would move into it, into the right part of the country, needing development, and you could have it off the wind. Then if you take off west from Sweetwater, you've got a corridor, again, going west that is for wind across New Mexico and Arizona.

For wind and sun?

Yes, both. Then you can pick up solar. And the Californians love that. They'd like to have solar and wind coming in to them, and some natural gas power.

So is it going to happen?

Well, it could happen if you had the right leadership. You're back to leadership again. This will have to be a federal project.

Well, you're friends with President Bush. Haven't you said this to him?

Haven't had this discussion with him. He hasn't asked for my advice on this.

... But to conclude, right now the United States uses 987,000 megawatts. So you're talking about increasing in 10 years the 150,000 megawatts. It could be accomplished in that corridor, north, south, east, west. And then you've got to have Washington help to be able to get corridors to move the power to the East Coast and the West Coast. And this could be done -- you're going to have to give some tax credit to make it happen.

Are you getting tax credits for your project?

Yes. We're certainly counting on it.

And where is the capital coming from? You need what, $10 billion?


Where's that coming from?

None of it will come from the government. I'll be able to finance that some way or another. There will be a huge equity piece to it. And then the financing will come in three or four different launches --

From investment bankers, venture capitalists?

Exactly. Yeah, you can take care of it without -- but you're going to have to have production tax credits.

In order to help you with operating costs? To make it cost-competitive?

Exactly. You have to have it.

So are the utility companies interested?

Oh, sure, because they're going to have to be 20 percent green.

So they're putting up money for your project?

No, I have no partners at this point. None.

Do you expect to get utility interest?

Probably. Everybody is interested in what you're doing. To what level, we'll see as time passes. They all want to see what you're up to. They know we've leased the wind. They know that we can build it. They know we have the money. Maybe there's 10 hurdles down the track. They know I can probably clear half of them before I have to have help.

So you're excited about it?

I am excited about it. I know it will work. We're getting ready to commit for about $2 billion worth of turbines next month. So yeah, I believe in it. And the only dollars in the game right now is mine.

You've also gone into the tar sands, oil sands. Why?

The oil that's coming out of the Suncor and Sand Creek projects up there is actually getting a $9 premium over WTI [West Texas Intermediate]. It's cleaner oil coming out of there.

But to get it out of there --

It's expensive.

And dirty. You have to burn a lot of fuel in order to get it cleaned out of the sand.

You've got to get it out of the sand, right. And when you come out, though, it [is] WTI plus $9.

All the environmentalists are outraged about oil sands. Getting the oil out of it requires burning a lot of natural gas, and that creates a lot more carbon emissions than just pumping oil off a rig in the Gulf of Mexico.

There's no question. Really, I haven't focused on it. It hadn't bothered me because we need the oil, and here's oil inside of the United States that's available for us. I'd rather pay the Canadians for it than I would somebody around the world. So I don't know. But you're going to use the natural gas whether you do it to recover the oil or whether you use it to heat your house. It's a way to make more money off of the oil and gas that they find, is to convert the oil sands to a product that sells for superior price. I mean, that's what the whole system is.

They're not going to put the money in it unless they make more out of it than what they put into it. These are businesses that have to make money.

I understand that. I've also listened to the other side of the argument from the environmental community, which says this is the wrong way to go at this point in time.

There's no question the environmental community has a voice, and people listen to it a lot more today than they did five or 10 years ago. And the world is changing slowly to green, renewable. Shell is doing a big wind project 100 miles southwest of where I am in the Texas panhandle -- 3,000 megawatts.

Why would an oil company like Shell or BP be interested in wind?

I think because they're an energy company and they're thinking, what's it going to be like in the future? Are we going to be a declining asset base? All the major oil companies, I think, look at these projects -- wind, solar, whatever -- and some decide to do it, some decide to wait.

Let me switch subjects: IGCC, this whole Integrated Gas[ification] Combined Cycle, to clean up coal -- you know much about it?

None. I'm not a coal guy at all. ... [But] it's going to work. As a businessman in the energy business, I say everything's going to work because you're going to have to have everything they're working on.

How is this going to be funded?

It's going to be funded because the price of energy is going up. ... I think the price of energy now has risen to the level that everything is going to come into play.

Well, do you think it would be a good idea for the government to put a bigger tax on fossil fuels in order to speed the day?

I said earlier that a gasoline tax is where I'd go to kill demand [for oil] and give relief on something else. It will hurt, there's no question.

You think the market's going to get there?

I think the market's going to get there. But the places where you're going to have to get help is Washington. For instance, if my Great Plains wind project made sense and they open up right-of-ways so that you can move that power from the Central to the East and Central to the West, you've got to somehow grease it. If you don't, you're going to be hung up forever with lawyers.

Well, the government has gotten involved in the past, rural electrification and TVA [Tennessee Valley Authority]. Do we need something like that here? There is this whole argument over whether the government should be involved in funding and picking winners, or whether it should be just left to the markets.

The way I see government should operate in this, they should open up corridors and help with that and not pick and choose. But I think that the ones that can handle it come in and make it happen. But you can't go in and invest a huge amount of money and not have a way to get your money back and make a profit.

You've got to have a road to get your profit to market, in this case, electrical cable.

And I think the government can open up that road to allow that to happen. Somebody says, "Well, they're going to do that, and then you get big rich again." I would expect to make money out of it. Is it a fair deal? It will be competitive with other fuels is what you have to do. You have to let the fuels compete against each other, and you've got to get in line. You can't be given a long-term cinch deal. You've got to deal with the markets as they exist.

Are you seeing a shift in Washington at the top levels in favor of these renewable energy solutions?

Everybody talks about renewables. Who would be against that? Now, how do we get from A to B? I'm not sure anybody's done a lot of thinking about that.

When you were interviewed on CNBC, you said, very powerfully, that somebody's got to stand up and do something about this, because this is huge.

I think it's the biggest thing that I've ever seen in my life. It's now unfolding in front of us. And I think the first place that should get everybody's attention is you're having this huge movement of wealth away from one area to another area, and you'd better figure out how you stop that. And that then brings you in to energy developed in this country. And then you start saying, you know, where is it? What can we do? And there's a lot of things we can do. But we haven't focused on them.

So what you're saying is that for a whole lot of reasons -- energy independence and the fact that fossil fuels are peaking sometime, if not now -- we've got to get on with it. Even putting climate change aside, we've got to get on with figuring out a new energy --

The climate change fits into it. They all work together. Fortunately, they do.

Well, there is this idea that's out there -- maybe it's just a quaint idea, but it's called corporate responsibility. Is there a point at which corporate responsibility changes in the face of what some people say is a crisis? It certainly did during World War II.

World War II, you had industries switching over to --

Because they were told to.

That's right; they were told to. You know, if Toyota comes out with a pickup truck, and that truck gets 35 miles to a gallon, and all at once the price of gasoline is $5 a gallon, that truck's going to get a lot of attention, and they'll go to 500,000 vehicles pretty damn quick. It's just market reaction to what the consumer wants.

Is there a larger responsibility to address what many are agreeing is a national crisis or a global crisis?

I don't think everybody's to a global crisis yet. Maybe it's just me that's there.

You think it's a crisis?

Yeah. And it's going to be changing continually. But I have a lot of confidence in corporate America. Believe it or not, I do. They'll make changes that will fit what's going on, and they'll meet the markets.

But I don't think you're going to have a crash program where you're going to say: "Hey, does everybody agree we're now in a crisis? So what we've got to do is we've all got to change, and we've got to do a better job of what we're doing." That's a weak pitch. And that's a breakfast meeting, and everybody claps their hands and goes off, doesn't mean anything.

Cap and trade: Do you think that's a good idea? Will it rejigger the market in a way that will work?

You know, what you're trying to do is to stay in business, and you'll stay in business by buying or by getting clean, OK? And it really is how do I get there the cheapest is the way it's going to work.

So either I put a scrubber on my plant or an IGCC plant on my coal plant, or I build a bunch of windmills.

Build a bunch of windmills. Or I buy permits from somebody to be able to cover my emissions. I guess it works, but it will be clumsy.

But isn't that where we're going? That's where Congress is talking about.

That's what they're talking about. I talked to a senator two years ago, and we were at a hunting camp. And actually there were three senators there. And I said, "You guys keep pulling Exxon in and asking all these questions about gouging on gasoline prices." I said, "You know how much oil's produced every day in the world?" "No." So I said: "OK, it's 85 million barrels. How much of that do you think is produced in the United States of the 85 million barrels?" Didn't know. "Five and a half million." And I said: "Guys keep jumping on Exxon. How much of that 85 million do you think Exxon produces?" Didn't know. It's 3 million barrels, under 3 million barrels.

It's 3 percent of the 85 million. The largest oil company in the world produces 3 percent of the oil. They have no control over the price of oil. Doesn't work that way. And I said, "Lay off of them."

I mean, these oil companies are owned by stockholders. They're in everybody's 401(k). You don't want to be taxing those people. It isn't the guys that are running the company that own the company; they're employees. Small stockholders in the company and working hard, doing well, and very efficient operations. And you can't tax them. There's not any windfall profits tax to be put on oil. I mean, what you've got to do is encourage those people to get into other forms of energy.

How do you do that?

I don't like stock buybacks. I think if a company has the money to buy their stock back, then they should take that and increase the dividends. Send it back to the stockholder. Let them invest their money again from the dividends --

But how do you get these companies to reinvest in renewables? You're saying somehow we've got to get these companies, like Exxon, without taxing them --

Well, Martin, companies should be run by the management and a board of directors of the company in the best interests of the shareholders. I mean, that's easy to say, but it also is exactly what should happen. And I think when a company has come to the point where they can't reinvest their cash flow back in the industry they're in or if they want to diversify, that's fine, if they think that's a good idea.

Historically, oil companies diversifying has not been a good business. But let's say that, you know, it's now come to the point where we have more money than we have prospects. Then the dividend goes up, and we pour the money back out to the shareholders and let them put it wherever they want to. Say that, well, maybe with the management that we have, we can get into renewables. Then I think this is an internal decision of that company. The board of directors says, "Let's go into renewables, or let's continue to increase dividend."

But isn't a cap-and-trade system a way of getting these companies to look more seriously at alternatives?

It probably is in that way, yes. It probably is.

So you're not opposed to it. You just think it might not work very well?

I think it will be difficult, because anytime the government designs something and puts it out there, then the first cut at it is, oh, my God, what do we have to do to conform to it? What are the ways we can circumvent this? What are the ways we can beat this? Do they have any loopholes in this?

And they go to work on them, OK? They find loopholes. Then we have more regulations that come on top of that, and it just stacks up, and it becomes horribly expensive.

So when Washington changes the rules, business gains the --

Sure they do. Sure they do.

And this is what I was talking about when I mentioned inertia, that these businesses are invested in certain grids, and there's a lot of inertia to get them to change.

Because at the present time all these companies are making record profits. Why would you change if you're making record profits? So you say, OK, we'll tax them. You don't want to do that. You've got to look at who owns them. They're owned --

Well, somebody's got to pay. I mean, basically we've been dumping carbon dioxide into the air for free, so somebody's got to pay to clean it up.

I don't think there's any question that the oil companies are very focused on that.

But whether you're a utility company or an oil company or a car company, those costs will be passed along to the consumer, won't they?

Well, they'll have to be. I'm not getting confused here on that. We're talking about cleaning up. That's a cost. But the fact that these companies are making a lot of money, they've got to pay their part of cleaning up, no question. But they shouldn't be taxed to clean up somebody else's stuff.

posted october 21, 2008

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