Is American Oil 'Dead'? T. Boone Pickens Says Yes ... But Only For Now

May 9, 2016
Originally published on May 13, 2016 1:53 pm

Just a few months ago, the price of a barrel of crude oil reached a 30-year low. That price has inched up since then, but still, it remains 60 percent lower than it was in the summer of 2014.

Oil and gas companies once flush with cash have cut exploration and pulled up to three-quarters of their rigs from the field. Meanwhile, many companies have gone under, and tens of thousands of people are out of work. The number of oil bankruptcies is hitting highs not seen since the telecom bust of nearly 15 years ago, according to Reuters.

There is no question the American oil industry is in rocky straits. The real question is: Should we look at this part as part of a cycle or simply the new normal?

To answer that question, NPR's Michel Martin called up T. Boone Pickens, iconic chairman of the energy hedge fund BP Capital. The billionaire oil investor recently made headlines for declaring, at a Manhattan dinner, that the industry is "dead in the water."

That said, it won't be forever, says Pickens.

"It'll cycle back up again, is what's gonna happen," he tells Martin. "But right now, we're dead in the water — we've lost probably 200,000 people. And so, when we start back up again, don't have the idea that we can take it back up."

Pickens, a self-described "environmentalist," has recommended that the way to make OPEC irrelevant is by embracing alternative energies like wind and solar power. His company Clean Energy Fuels also builds and runs liquefied natural gas fueling stations.

Still, he's not convinced that renewable energies alone are the answer.

"Listen, 94 million barrels a day is what the world produces, and 70 percent of that goes to transportation fuel," he says. "Wind and solar are beautiful resources, and America has plenty of both. But neither one of them are transportation fuels. I mean, do they help? Of course they help! And they should be developed. I'm for anything American."

But, he says, "I am also a realist. And the realist is, we use one unbelievable amount of energy in the world. Ninety-four million barrels a day — you can't cut that out. It's impossible."

Elsewhere in the course of their conversation, Pickens talked with Martin about what he sees as the engine of the oil industry slump, as well as why he'll be supporting Donald Trump in the coming presidential election.

"I've been around a long time, and I'm so thankful that the Lord has let me hang around long enough to see this. I think it's great for America."


Interview Highlights

On the causes of the downturn

Since 1980 ... the price of oil has dropped more than in half five times. Four of the times, when that happened, the Saudis stabilized the price. It was all by oversupply of oil.

A motorist fills her car at a gas station near an oil field pumping rig in Oklahoma City.
J. Pat Carter / Getty Images

So now, fast-forward and this is the fifth time. Oil price was $100 a barrel and dropped to $26. And the Saudis made it very clear they would not be the swing producer; it's up to the United States. Why? We're the ones that oversupplied the market. The Saudis said they would not cut. They didn't. The Russians never cut. So it was up to us.

And now, we went from 1,609 rigs — November 2014, I said you will cut a thousand rigs off of it real fast — today, it's down to 342 rigs.

On Donald Trump

He's gonna win, is what's gonna happen. The guy is going to win! Because America is — they want a change. They don't know for sure what Trump will change; they believe that he will change something. And I do, too. ...

Sure, I'm gonna vote for him.

On why so many conservatives have refused to line up behind Trump

They can't believe it. They cannot believe it isn't working like it has always in the past. Somebody wants change, and it happens to be a businessman that stepped up. And he's a loudmouth businessman; he gets up there, and he says, looks like and acts like a leader. And so, we're going to go with him. And that's exactly where you are.

All of us said — when he first showed up, I said, "I know Donald, I've known him for years, and he isn't gonna be a factor." He was a factor! And he kept being a factor. Every time he said something that wasn't very good, he actually went up in the polls and we couldn't believe that — all of us! I didn't think he was gonna win, but he kept gaining support. And then he goes to New York, and he just blows them out — and goes over to Indiana and just finishes the whole thing off. ... Listen, he got the nomination the way you get the nomination: The people gave him the nomination. ...

We are gonna have change. Now, you say, well, you may not like the change. I may not, but I'm a change advocate. If you go back over history, I'm always a change advocate. And so I'm ready for change, and I think Donald Trump's gonna give it to us.

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MICHEL MARTIN, HOST:

But we wanted to dig into the issue a bit more. We were wondering if this is just part of a cycle or the new normal so we thought this was a good time to call up T. Boone Pickens. He's the chairman of energy hedge fund BP Capital. And not to put too fine a point on it, he is the well-known billionaire oil investor. He joined us from his office in Dallas. Thank you so much for speaking with us.

T. BOONE PICKENS: Sure, Michel.

MARTIN: I wanted to ask you - recently, you made headlines for declaring at a dinner that the industry is dead in the water. Can you elaborate on that?

PICKENS: Sure. Since 1980, five times, the price of oil has dropped more than in half. Four of the times, the Saudis stabilized the price. It was all by oversupply of oil. So now fast forward. This is the fifth time oil price was $100 a barrel and dropped 26. And the Saudis made it very clear they would not be the swaying producer. It's up to the United States. Why? We're the ones that oversupplied the market. The Saudis said they would not cut. They didn't. The Russians never cut. So it was up to us. And now we went from 1,609 rigs - November 2014. I said you will cut 1,000 rigs off of it real fast. Today, it's down to 342 rigs.

MARTIN: But I'm wondering, though - as you're saying - is the - when you say that the industry is dead in the water, you mean permanently? Or you mean as part of a cycle?

PICKENS: Cycle. It'll cycle back up again - is what's going to happen. But right now we're dead in the water. We've lost probably 200,000 people - not easy to replace. Those people have to have jobs. And so when we start back up again, don't have the idea that we can take it back up.

MARTIN: Is there anything about this downturn that is different that you would wish to highlight, or not?

PICKENS: Well, the downturn this time - the United States is a swing producer instead of the Saudis. They didn't cut. We're the ones that had to cut. And we cut because - couldn't make any money - all for good economic reason. But the cut - who is this hurt by? The oil and gas industry in the United States. Don't worry about them. Nobody worries about oil and gas industry. Who did it help? It helped the rest of the world. It's like a huge tax break or something for the rest of the world. It was great for the consumer. You, Michel - you're not an oil producer. You like the drop in gasoline prices.

MARTIN: I confess that I do.

PICKENS: Is it anything to feel guilty about? Absolutely not.

MARTIN: You talked a little bit about the geopolitics here just for a minute. I mean, obviously, OPEC has been a concern - a national security concern for many, many years of Americans. You've written and talked about how to make OPEC less relevant by saying we need to embrace alternative energies, from natural gas to wind turbines, solar, liquefied fuels like the kind produced by your company Clean Energy Fuels Corp., which builds and runs liquefied natural gas fueling stations. I have to ask - if you had been a promoter of these technologies earlier, would the U.S. be in a different place than we are today?

PICKENS: No. Something I want to say before we go too far - I had to be amused at Hillary Clinton on March 16 when she said we are going to cut out coal because it's dirty, and we're going to cut out all fossil fuels. Listen, 94 million barrels a day is what the world produces. And 70 percent of that goes to transportation fuel. OK, Hillary. Tell me - how do you replace that 70 percent? Wind and solar - beautiful resources. And America has plenty of both.

But neither one of them are transportation fuels. I mean, do they help? Of course they help. And they should be developed. I am an environmentalist. I am also a realist. And the realist is we use one unbelievable amount of energy in the world - 94 million barrels a day. You can't cut that out. It's impossible.

MARTIN: I wanted to ask you a little bit more about politics, since you went there. You have said that Donald Trump is the best candidate for the energy industry. But you also said that he doesn't seem all that electable. That was a couple of weeks ago. Now that he's the de facto Republican nominee, do you have any other thoughts about him?

PICKENS: Sure. He's going to win - is what's going to happen - because America is - they want to change. They don't know for sure what Trump will change. They believe that he will change something. And I do, too.

MARTIN: Are you going to vote for him?

PICKENS: Oh, sure, I'm going to vote for him.

MARTIN: Why do you think there are such wildly varying views about him on the right? Let's just take Democrats and liberals out of the equation. Let's just talk about conservatives.

PICKENS: Michel, they cannot believe it. They cannot believe it isn't working like it has always in the past. Somebody wants change, and it happens to be a businessman that stepped up. When he first showed up, I said, you know, I know Donald. I've known him for years. And he isn't going to be a factor. He was a factor. Every time he said something that wasn't very good, he actually went up in the polls. And we couldn't believe that - all of us. Listen, he got the nomination the way you get the nomination. The people gave him the nomination. He didn't get it by accident.

MARTIN: Republicans gave him the nomination.

PICKENS: He didn't find the nomination.

MARTIN: But Republicans gave him the nomination. So you feel that he's...

PICKENS: The people.

MARTIN: ...Going to win in November?

PICKENS: The people gave...

MARTIN: Republicans.

PICKENS: The people gave him the nomination.

MARTIN: (Laughter) Republican people.

PICKENS: No.

MARTIN: (Laughter) Yeah.

PICKENS: The people did. He picked up a lot of people that are not Republicans.

MARTIN: (Laughter) OK. So we're going to talk on November 10, right? And you're going to tell me - whatever happens, we're going to talk again. And you're going to tell me what you think about whatever there is...

PICKENS: I'll be more than happy to.

MARTIN: OK. You think...

PICKENS: I like to talk to you. You let me talk.

MARTIN: (Laughter) Well, that's my job. I listen. That's really my job.

PICKENS: It's not like talking to Bill O'Reilly.

MARTIN: Oh, I would hope not (laughter).

PICKENS: Bill wants to talk, too. So...

MARTIN: Well, thank you very much for speaking with us.

PICKENS: Sure.

MARTIN: T. Boone Pickens chairs the hedge fund BP Capital Management. We reached him at his office in Dallas. Transcript provided by NPR, Copyright NPR.