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|  | APRIL 27, 2006
By Christopher Palmeri T. Boone Pickens: Still Courting ControversyThe Eighties-vintage corporate raider and ex-CEO of Mesa Petroleum dismisses his critics and says that a gas price of $5 a gallon is a good thingHis days as a corporate raider are long gone. But legendary oilman T. Boone Pickens is still as irascible as ever. During an appearance at the Milken Institute's annual conference, which runs Apr. 24 to Apr. 26, the 77-year-old Pickens opined on the current state of the oil industry, his own investments, and what he thought of former Enron honchos Kenneth Lay and Jeffrey Skilling's "don't blame us" defense. In the 1980s, Pickens, then chief executive of Mesa Petroleum, struck fear in the hearts of CEOs whose companies he tried to buy. These days Pickens is an oil exec's best friend, holding long-term positions in companies such as EOG Resources (EOG ) and Quicksilver Resources (KWK ) through his Dallas-based investment firm BP Capital Management. Pickens claims to have produced returns in excess of 2,000%. Perhaps not coincidentally, he has emerged as one of the most vocal cheerleaders for energy prices. His current prognostication as oil hovers around $72 a barrel: "It will hit $80 before it hits $60." "BLOOD, GUTS, AND FEATHERS." Pickens says his central message to oil investors and consumers is that the industry is simply not capable of producing more than 85 million barrels per day. Global demand is preciously close to that at 84 million and by the end of the year it should top 85 million. "Blood, guts, and feathers -- that's all you got," he says. "Everything is squeezed as much as it can be squeezed." He doesn't believe analysts who say there is a "terrorism premium" built into the price of oil. "Who assigns that?" he asks. "To me, it's just the market. That's what people are willing to pay." Being a prominent voice in the industry, Pickens meets frequently with politicians and pundits who ask him what to do about today's high prices. Fox News (NWS ) host Bill O'Reilly, for example, once asked: "If Exxon's cost to produce oil is $20 a barrel why can't they sell it for $30?" Pickens' response: "They're not fools." Pickens says he had a Congressman suggest recently that Washington should put caps on prices. "It's never worked," Pickens told him. His solution is just the opposite -- raise the price of gasoline by putting more taxes on it. He suggested bringing the total price to $5 a gallon, much as it in the rest of the world. "Price will kill demand," he says. FAN OF ALTERNATIVE. Asked where he'd recommend putting money today, Pickens gave two suggestions. One was coal, because natural gas has become too costly to use for electricity generation -- and therefore coal's share of generation will grow. His second bet is the oil sands in Canada. Pickens says he can remember being in the Calgary Petroleum Club back in 1967 when the Canadian government first announced it was investing in new technology that mined oil from these unconventional deposits. Oil was $5 a barrel at the time. Pickens said he concluded you'd have to be a government to invest in that. Today, Canadian oil sands producer Suncor Energy (SU ) is his single largest holding, and it has been so for five years. He also owns shares in the Canadian Oil Sands Trust. Pickens is also a big believer in alternative energy. Although he says he has no investments in ethanol, which has been enjoying a boom lately, he has built a privately held business that installs natural gas pumps for bus and truck fleets at airports and for garbage haulers. JAB AT ENRON'S EXECS. Pickens says he first got Mesa into that business 18 years ago, and it has taken that long to make it successful. Still, he sees room for all sorts of fuels, from biodiesel to nuclear energy. "It'll be a hodgepodge," he says. "Everything's got to be looked at." There is one exception, though: hydrogen cars. The technology -- much touted by Detroit -- is years, if not decades away, Pickens says. "It's too expensive," he says. "None of us will live to drive a hydrogen car." Pickens also took a jab at former Enron execs Lay and Skilling, now on trial for fraud and insider trading regarding that company's multibillion dollar collapse. In his testimony this week, Lay blamed the media and short-sellers for instigating Enron's downfall. "I thought, 'My, the problems at Enron were pretty simple, bad press and somebody shorted the stock,'" Pickens says. "I think there was more to it than that." A geologist by training, Pickens' tendency has always been to drill a little deeper.  Palmeri is a senior correspondent in BusinessWeek's Los Angeles bureau Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
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