Transcript: Big Pressure on Big Oil

This is a partial transcript from "Your World with Neil Cavuto," October 25, 2005, that was edited for clarity.

NEIL CAVUTO, HOST: Big oil is big business and it's under fire on Capitol Hill. Americans are feeling the pinch at the pump and the GOP is putting pressure on oil companies to bring prices down.

What does oil magnate Boone Pickens (search) think of this GOP pressure? He's in the flesh with me. That's always a big deal. He's the chairman of BP Capital (search). And he joins me right now.

Boone, they're circling the wagons around you, it sounds like.

BOONE PICKENS, FOUNDER & CHAIRMAN, BP CAPITAL: I don't know, it's back to the same place that we were several months ago.

CAVUTO: What's going on here?

PICKENS: You have so much oil and gas to deal with around the world. And it's very hard to increase supply. In fact, I don't think you can increase supply beyond 85 million barrels of oil a day.

CAVUTO: What was going on with natural gas today? It was up more than a buck at $14.35, something like that. What the heck is going on?

PICKENS: Well, Neil, I don't want you to get too excited on these one-day moves.

CAVUTO: Well, it's the multi-day trends that are alarming. The chart seems to indicate we have gone up, up and away.

PICKENS: There's no question we are up, up and away.

CAVUTO: How much more up?

PICKENS: Well, the United States' domestic production now is in decline.

And so, we get production from Canada and we get liquefied natural gas (search) (LNG). And today, probably what happened is that we had our first cold on the East Coast, and it's a little nervous, the market is. And, at the same time, you had some short situations that were believing the market would go down.

CAVUTO: And they had to cover.

PICKENS: They had to cover.

CAVUTO: And it went up.

PICKENS: And so, that kicked it off to the up side.

CAVUTO: But a lot of people suspect, Boone, that something more sinister is afoot.

PICKENS: Oh, I know they do.

CAVUTO: What do you think of that?

PICKENS: It is not sinister. It absolutely is not sinister.

CAVUTO: Is it oil supply and demand?

PICKENS: Well, let's just touch on this. I believe that this situation is global. And a lot of people view it as a domestic situation. That is not so. And let me give you proof of that. Today, LNG is being sopped up by Spain as it comes out and into the market.

CAVUTO: That's oil and natural gas just in other areas of the world.

PICKENS: Liquefied natural gas is being sopped up in Spain, because they have a hydroelectric problem. And well, it's a shorter haul with LNG out of the Mideast to Europe than it is to United States.

CAVUTO: But what has changed so markedly this year versus last year? It's not that we're a lot colder. It's not that they're using a lot more of this stuff. What changed?

PICKENS: Well, I have said this about oil markets before, that, if you are 100,000 barrels too much, you have a surplus. If you are 10,000 barrels short, then you have a crisis.

CAVUTO: Well, Hillary Clinton (search) says, you're not in a crisis. You energy guys, are making money hand over fist. So, share the manna.

PICKENS: Well, you remember in December 1998, the price of oil was $10. And the oil companies were losing their shirt.

And today, it's a global situation. Demand is there. And the price goes up. It's a market situation. It isn't anybody fixes any price. Can you just imagine how we would call a meeting — I'm saying I'm now in the oil business — we would call a meeting to get together to fix the price?

CAVUTO: Boone, here's the thing. And I understand everything you are saying. But, people look at you and say, Boone Pickens, the guy's loaded. He's one of the richest people on the planet. And he's getting richer still.

PICKENS: OK. Let me ask you this, that, today, $60 is — by a lot of people — too high. And I heard the other night you had a debate on FOX and I listened to that intently. And it was...

CAVUTO: Who do you think won that debate?

PICKENS: Well, I'm prejudiced.


PICKENS: But the point that I want to make, in that discussion, they made $1.5 billion last year in the second quarter. Now, this year, they're going to make $2.5 billion, talking about a company, I think.

CAVUTO: Right. We were talking about ExxonMobil, right.

PICKENS: And the question was, isn't $1.5 billion enough?

Well, OK. If we decided, yes, $1.5 billion is enough, where do you put the extra $1 billion? I mean, if the market is $60 a barrel, and I think $50 a barrel is enough, who is it? When I get my oil, I'm buying oil now for the refinery. And I say, well, I'm going to pay $50, instead of $60, or I'm going to pay $60, instead of $50. Where does the money go?

CAVUTO: How do you feel when Republicans now are starting to get itchy and point the trigger finger at you? Not you individually.

PICKENS: I know, but the industry.

CAVUTO: Right.

PICKENS: Yes. The industry is good. I promise you, the industry is honest.

What I would like to see happen is, when you look at the Gulf of Mexico, 10 billion cubic feet of gas a day. All right, that's the production out of the Gulf. We only have about 40 percent or 50 percent of that back on.

On the oil, it's a million-and-a-half barrels a day out of the Gulf. We have about 30 percent of that back on.

CAVUTO: Bottom line, you are saying it's going to continue, right?

PICKENS: No. What the bottom line is, I wish those oil companies that had made the money out of the Gulf of Mexico that now sees Louisiana and Mississippi in the problems that they have I would like to see them give $100 billion to the restoration of the Gulf Coast.

CAVUTO: Boone, I wish we had more time. Unfortunately, we don't.

Great seeing you in the flesh. Thank you for stopping by.


CAVUTO: All right. Boone Pickens.

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