• This is a partial transcript from "Your World with Neil Cavuto," August 31, 2005, that was edited for clarity.

    NEIL CAVUTO, HOST: Oil prices did drop today, as the president said he's going to tap the nation's emergency stockpile. Crude was down more than $1, still pretty high, though, to close to $69. Here's the story that wasn't getting much attention, though, gasoline prices (search), in other words what you pay at the pump, the futures for those hitting a record today, darn close to $3. And that, by the way, my friends, is before you start adding on these various state, federal and other excise taxes that can send that up $1 or more.

    So, for a lot of areas of the country, it's going to mean $4 at a minimum.

    Joining us right now from Dallas is the guy who saw a lot of this coming, even before Hurricane Katrina (search). I'm talking about oil tycoon Boone Pickens (search), the chairman of BP Capital.

    Boone, what do you make of what's happening?

    T. BOONE PICKENS, FOUNDER, BP CAPITAL: Neil, this is a very sad situation for the people in Louisiana, Mississippi, and along the Gulf Coast.

    BP Capital's partners, we talked to Bonnie McElveen-Hunter, the chairperson for the Red Cross, an hour ago. And we gave $5 million in a challenge to others to give to the people and help them in the Gulf Coast. This is a very, very sad situation for those in that area.

    CAVUTO: Well, I'm sure they're going to appreciate that money.

    But, in the meantime, the reality for a lot folks in and way beyond this region, Boone, is that we are going to look at higher energy costs going forward. And this storm sort of just kind of quickened that pace. What do you make of that?

    PICKENS: I think that's probably happened.

    There's tremendous damage that I don't think that we could even assess at this point. And so, you know, the Georgia situation, which was just reported, I didn't know about that, and I think you're going to hear more and more of these in the next two or three days.

    CAVUTO: By that, you are talking about supply disruptions that will force, you know, shortages.

    PICKENS: Oh, yes. We're going to have shortages, and prices are going to go up and...

    CAVUTO: Where are we going to have them? Where are we going to have them?

    PICKENS: You mean what products are we going to have them or where are they going to be located?

    CAVUTO: Physically, where they're located.

    PICKENS: Physically, of course, I'm sure the most difficult area for us will be in the Gulf Coast.

    And, you know, it's going to spread across the country to the Northeast, because we have some of those product lines that are shut down. They're not sending product up to the East Coast. And so, I would suppose we're going to see two there for sure.

    The products, I mean, the gasoline is going to be extremely tight for us. And, you know, the president, I think, did exactly the right thing in releasing oil from the SPR. And having said that, if you don't have a refinery operating, it's hard to use the oil that's available to you. So, I don't know exactly how that's going to work out, but I saw where the Conoco-Phillips Belle Chasse refinery is now two or three months that it will be down. And that's a big refinery.

    CAVUTO: But, Boone, can I ask you this, though, that everyone seems to think that oil prices, nat gas prices, unleaded gasoline prices, all those futures that we watch very closely, that they're going to go up, up, up and away. So, the contrarian in me says that, if everyone says it's going one way, maybe we have overdone it, overstated it? What do you think?

    PICKENS: I think, Neil, you have got to go back to the basics. And I start with supply. And I still don't believe, worldwide, we have more than 85 million barrels of oil daily.

    And when you multiply that times 365, it's 30 billion barrels a year that the world is consuming. There's no way that we replace 30 billion barrels by our drilling activity, exploration activity, or whatever. Consequently, if you assume 85 million is the best we're going to do on supply, then the only way you are going to able to solve the problem is, let the price rise and kill the demand, because we're looking at a fourth- quarter demand of 87 million barrels a day.

    CAVUTO: All right.

    PICKENS: And 85 won't service 87.

    CAVUTO: OK.

    PICKENS: So, price is going to have to kill it.

    CAVUTO: All right, Boone, thank you very much, I guess. I will stress the "I guess" part. Good seeing you.

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