By Bill Steigerwald
February 17, 2006
These days Pickens, 77, is running BP Capital, a successful hedge fund that invests primarily in oil and gas futures, alternative energy and energy-related companies. I talked to Pickens -- who says he went after Gulf Oil not to move it out of Pittsburgh but because he thought it was being so badly managed -- by telephone on Thursday from his offices in Dallas:
Q: What was your reaction when you heard President Bush say America "was addicted to oil" and we need to kick the habit?
A: Well, there's no question
we're addicted to oil. We're using between 20 and 25 percent
of all the oil a day in the world and we have less than 5 percent
of the population.
A: The big oil fields in the world have been found. From time to time you will find another one, but you don't find them so often. I think 85 million barrels a day is all the world can produce and that's what you are producing today. I don't think you can "find" your way out of the problem. Probably the best thing you can do is raise the price and start to kill the demand.
Q: An Exxon executive said this week that the United States should stop trying to become "energy independent" and become "energy interdependent." What do you think of that statement?
A: Well, you can't become energy independent. That's out of the question because you're importing 60 percent of the oil that you use every day. There's no way you're going to (become independent). ... If everybody in the United States started riding a bicycle, it'll work.
Q: For 100 years people have been saying we've been running out of oil, but every year we have more and more in proven reserves and
A: That's not true. What's confused the world is that we've had more oil available to us than we've used. So the supply was greater than the demand. Now the demand is equivalent to the supply. And I don't think you can get any higher supply than you are getting right now. The demand is going to go on up. The main thing is, when the price goes up, demand will slow.
Q: When the price goes up, won't they be able to find new ways of finding and recovering oil? That won't make a difference?
A: That's right. You can do that. But don't count on technology bailing you out. It's too big for technology. You can just do so much with oil in the ground.
Q: Of all the alternative energy sources, which will become the most important in the next 50 years?
A: I think you're going to
have a second infrastructure that's already under way -- it's
started in California -- to use natural gas as a transportation
fuel. Of all the oil used around the world every day, I think
about 75 percent is used for transportation.
Q: The switch to using natural gas to power electric plants was a federal energy policy decision, right?
A: What it was, if you remember, was more of an environmental issue. It was cleaner. See, natural gas burns, oh, I don't know, 86 percent cleaner than gasoline. It has many better qualities. But the point is, it is domestic. You're going to import some LNG, but the percentage will not be scary, like the percentage of oil.
Q: Let's make you "Energy Czar." What should the federal government's energy policy be doing that it is not doing now?
A: One is that the people should
understand that this country will never become energy independent.
It isn't going to happen. ... So what can you do? What you'll
do is, you'll start to live within your means. You'll cut down
consumption. Some people have the idea that this is just the
United States. It's just not so. The point is that it should
be looked at as a global commodity. The American people will
understand if somebody explains it to them.
Q: It sounds like you're saying let the market figure this out. Is there a role for government?
A: I don't particularly like wind because I don't like the unsightly towers associated with them. But there's no question wind will work. And solar will work. And when the price is right, these things will all start to come into play.
Q: Without the need for subsidies. They're heavily subsidized now, as is ethanol?
A: I don't know whether you subsidize or allow the price of fossil fuel to go up, and when you do, it will create opportunities for the alternatives.
Q: By the way, Wikipedia, the online encyclopedia, describes you as a "well-known takeover artist" from the 1980s. What would you prefer to be remembered as?
A: "Legendary oilman."
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