Oilman Boone Pickens, who came to prominence in the '80s by raiding companies such as Gulf, Phillips, and Unocal (UCL), has bet big lately on rising oil prices -- and won. Pickens has guided his Dallas-based fund-management firm BP Capital with a prescient prediction that oil would hit $50. His BP Capital Energy Commodity Fund has jumped 390% for the year, and his equity fund has risen 70%. Here's what Pickens, 76, had to say in a recent meeting with BusinessWeek editors:
On where oil prices are headed:
I'll say it: $60 before $40. I think that will happen. I think we've seen $40 oil for the last time.
On rising gasoline prices:
I think this country finally digested $2 gasoline. How much above $2 can we stand? I don't know. But I feel...when the next car is bought, there's going to be a lot of conversation about [it taking] $100 to fill it up. That's going to change some thinking as to what kind of car you buy.
On where the U.S. should get oil:
[Canada's Tar Sands] have the same reserves, 250 billion barrels, as the Saudis have. To bring it up to [Saudi production levels], the cost would be somewhere around $150 billion or $250 billion. That's not that bad -- in that you don't have to have an army and a navy protecting it.
On the cash-rich oil majors:
What the industry is short of are drillable prospects. That's the missing link. They're drilling everything in sight. But looking for oil and gas around the world -- well, gas is easier, but oil is extremely difficult, and prospects are short -- they want to do it. It isn't the case that somebody's trying to sit on the cash.
On drilling in the Arctic National Wildlife Refuge:
I say leave it for another generation. That's a 2 million-barrel pipeline with 700,000 barrels in it right now. So all you could do is 1.3 million [more]. We're importing daily 10 million barrels of oil.
On natural gas, which hit $7.63 on Oct. 20:
You're getting ready to see $10 natural gas. The reason you know that you are is [because of] heating oil. Heating oil is in direct competition with natural gas, and it [has set record prices]. So you're headed in that direction, and we'll probably get there [within] four months. So that will become a problem for the country.
On leaner times, when BP Capital lost money in 1997 and 1998:
I struggled through the '90s. I struggled to the point of depression. I couldn't get anything to work. I really got down in the '90s. Then, you had this turnaround. Now it looks like everything you throw is a strike.
On the viability of wind energy:
The best place to put a wind farm would be on the water, because the wind is most consistent on the oceans. [But] somebody's got to see them. I think that will be a problem, to deal with the appearance of them. It may not be [a problem] if you're cold and you've got to have power.
On being a senior:
I don't take a salary [at BP Capital]. You know why? I get my Social Security.