Texas Oilman Sees $5 per Gallon Gas Worldwide
Texas oilman T. Boone Pickens suggested Tuesday that the short-term solution to oil supply and demand problems is high gasoline prices at the pump — perhaps $5 per gallon.
In a speech to civic clubs, Pickens, a native of Oklahoma, said demand for oil is about 85 million barrels a day worldwide, about the same as both supply and refining capacity.
In the foreseeable future, he said, production is coming down at the same time demand will be growing. He said China had doubled its demand for oil in 10 years and the demand will continue to grow.
Pickens, the founder of Mesa Petroleum Co., said demand is so tight that if Iran pulled one million barrels of oil off the market “you’ll have $75 [a barrel] oil in 24 hours.”
Because of the tight supply and demand situation, countries like Iran have as much clout on prices as the Organization of Petroleum Exporting Countries had a decade ago, he said.
He reeled off the names of several countries that could have such an impact, including politically turbulent Venezuela, the third biggest exporter of oil to the U.S. behind Canada and Mexico. Mideast countries account for about 25 percent of the nation’s oil, he said.
“It’ll happen. This is the truth. This is fact. I’m not talking fiction here,” he said of the possibility of a dramatic spike in already high oil prices soon.
Pickens recounted a conversation a couple months back with a congressman who complained about the oilman going on television and predicting consumers would be paying $3 per gallon for gasoline someday.
“He said, ‘you are affecting the market.’ I said you only affect the market on TV for about 15 minutes, then the fundamentals take over.”
The congressman said he wanted $2 per gallon gasoline so he could stop getting so many complaining telephone calls and letters from consumers.
“I said you ought to think about moving up to a world index price of say $5 for gasoline” to reduce demand and perhaps create enough government revenue to cut payroll taxes.
“Well, he left and I never heard from him so I didn’t think I made much of an impression.
“But all of this is going to come to a point in the not-too-distant future. Because if I’m right about the supply — the 85 million — and the demand is going up, then it’s really easy to see what is getting ready happen. And when does it happen? It’s going to happen pretty quick.”
Pickens he “fell out of my chair” when he heard President Bush’s suggestion that wood chips and switch grass could be used to produce ethanol that would help solve the country’s energy woes.
“Wood chips and switch grass are not gonna get us ethanol at a cheap price. I’m not sure you want ethanol. The emissions from ethanol are not good,” he said.
Pickens also did not think Alaskan oil or new discoveries will have much of an impact on the oil shortage in the future.
“By 2020, you’re going to need 125 million barrels a day for the world. And I’ve already said I don’t think you can get above 85. That’s a long way from 125 -- a long way. So price has to do it.”
Pickens said he tires of hearing politicians say they want to make the U.S. energy independent. “It isn’t possible for us to be,” he said.
On a brighter note, he held out hope that some alternative fuels will help to supply some of the country’s transportation needs in the future, particularly natural gas.
But he said higher prices will be part of the solution.
On the subject of natural gas, Pickens predicted prices will go lower in the months ahead before rebounding during the fall and winter.
KHOU
In a speech to civic clubs, Pickens, a native of Oklahoma, said demand for oil is about 85 million barrels a day worldwide, about the same as both supply and refining capacity.
In the foreseeable future, he said, production is coming down at the same time demand will be growing. He said China had doubled its demand for oil in 10 years and the demand will continue to grow.
Pickens, the founder of Mesa Petroleum Co., said demand is so tight that if Iran pulled one million barrels of oil off the market “you’ll have $75 [a barrel] oil in 24 hours.”
Because of the tight supply and demand situation, countries like Iran have as much clout on prices as the Organization of Petroleum Exporting Countries had a decade ago, he said.
He reeled off the names of several countries that could have such an impact, including politically turbulent Venezuela, the third biggest exporter of oil to the U.S. behind Canada and Mexico. Mideast countries account for about 25 percent of the nation’s oil, he said.
“It’ll happen. This is the truth. This is fact. I’m not talking fiction here,” he said of the possibility of a dramatic spike in already high oil prices soon.
Pickens recounted a conversation a couple months back with a congressman who complained about the oilman going on television and predicting consumers would be paying $3 per gallon for gasoline someday.
“He said, ‘you are affecting the market.’ I said you only affect the market on TV for about 15 minutes, then the fundamentals take over.”
The congressman said he wanted $2 per gallon gasoline so he could stop getting so many complaining telephone calls and letters from consumers.
“I said you ought to think about moving up to a world index price of say $5 for gasoline” to reduce demand and perhaps create enough government revenue to cut payroll taxes.
“Well, he left and I never heard from him so I didn’t think I made much of an impression.
“But all of this is going to come to a point in the not-too-distant future. Because if I’m right about the supply — the 85 million — and the demand is going up, then it’s really easy to see what is getting ready happen. And when does it happen? It’s going to happen pretty quick.”
Pickens he “fell out of my chair” when he heard President Bush’s suggestion that wood chips and switch grass could be used to produce ethanol that would help solve the country’s energy woes.
“Wood chips and switch grass are not gonna get us ethanol at a cheap price. I’m not sure you want ethanol. The emissions from ethanol are not good,” he said.
Pickens also did not think Alaskan oil or new discoveries will have much of an impact on the oil shortage in the future.
“By 2020, you’re going to need 125 million barrels a day for the world. And I’ve already said I don’t think you can get above 85. That’s a long way from 125 -- a long way. So price has to do it.”
Pickens said he tires of hearing politicians say they want to make the U.S. energy independent. “It isn’t possible for us to be,” he said.
On a brighter note, he held out hope that some alternative fuels will help to supply some of the country’s transportation needs in the future, particularly natural gas.
But he said higher prices will be part of the solution.
On the subject of natural gas, Pickens predicted prices will go lower in the months ahead before rebounding during the fall and winter.
KHOU
posted by Ottawa Gas Prices | 8:31 AM
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