This interview appears in the May 2008 issue of The American Spectator. To subscribe to our monthly print edition, click here.
T. Boone Pickens has spent a lifetime in the oil business. Shortly after graduating from Oklahoma A&M (now Oklahoma State University) in 1951, Pickens went to work for Phillips Petroleum. In 1954, he borrowed $2,500 and joined with two other investors to start a domestic oil and gas company. The business would eventually become part of Mesa Petroleum, which Pickens built over several decades into one of the largest independent natural gas and oil production companies in America. He left Mesa in 1996.
Pickens, who turns 80 this May, is still hard at work running his multi-billion-dollar energy hedge fund, BP Capital. But the legendary oilman, who built his fortune by placing timely bets, is now looking at alternatives. Last year, Pickens correctly predicted that we would be seeing a $100 barrel of oil, and he recently announced plans to build a $10 billion, 150,000-acre wind farm in the Texas panhandle, which would be the biggest in the world.
Through the T. Boone Pickens Foundation, Pickens has become one of the largest philanthropists in America, having donated $600 million over the course of his career to medical care, education, and college athletics. He also is the benefactor of The American Spectator’s Young Journalism Training Program.
TAS reporter Philip Klein spoke to Pickens over the phone about his views on the future of energy.
PHILIP KLEIN: Why is it so important for America to develop alternative sources of energy?
T. BOONE PICKENS: According to the crude oil report, as of today [March 12] we have imported crude oil at the cost for $1.4 billion for the week. Multiply 52 weeks times $1.4 billion [a day]. You’ll get right at $600 billion a year you’re paying for imported crude oil. We can’t keep doing that. It’s the greatest transfer of wealth ever recorded in the history of the world.
PK: What would you say to free trade purists who say it’s not a big deal to purchase products overseas?
BP: You can say it’s just free trade. You’re just buying somebody else’s products. I understand that argument, but if you’re going to continue to do it as you have in the past, then in ten years you’re going have to burn up $6 trillion.
PK: In the 1970s oil was very expensive, then it went back down. In the late '90s we had very cheap oil. Why can’t that happen again?
BP: That will never be repeated, because we’ve had a fundamental change. The world’s oil production has peaked. Now supply is capped at 85 million barrels a day and demand is growing. We’ve never seen that before. It’s also going to be declining at a rate probably of 6 percent a year. This time next year you’re probably going to have 80 million barrels a day.
It’s unlikely that growing production can ever happen. What you’re really focused on is even maintaining production at 85 million. You’re going to have to replace 5 million barrels a day every year.
PK: What about discovering new oil or drilling in Alaska or in the oil sands?
BP: I don’t think the ANWR is going to be released to be developed, but you’re familiar with the transportation of crude oil off of the North Slope in the pipeline area. Do you know what the capacity of that is? Some people have the idea that ANWR could solve a problem for the United States, which is ridiculous.
ANWR, they try to compare to Prudhoe Bay, an oil field where the ultimate recovery out of it is 14 billion barrels. It’s depleted substantially. At one time that field could fill that Alyeska line, which is 2 million barrels a day. Keep that in mind, that’s all it is: 2 million. That has now declined to about 700,000 barrels a day and they put in satellite production from Endicott and other fields around Prudhoe Bay. But they’ve pretty well gutted everything that’s available to go into that line.
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