T. Boone Pickens on the Future of Crude Prices, Building Oil Companies, and Changing the World
“The American people know something is wrong as far as energy is concerned. They don't think they are being told the truth.” ~ T. Boone Pickens
(The proclaimed "Warren Buffett" of oil & gas himself, T. Boone Pickens)
As T. Boone Pickens has mentioned, this isn’t the first time oil has hit near rock bottom prices (remember the 80’s in Texas). Like it or not, we have allowed crude oil become a too crucial part of life. Oil/Gas workers are in total “freak-out mode,” due to the job and wage cuts. Because of our MASSIVE consumption of this type of fossil fuel in many aspects of our life, especially in our transportation needs. Should we care about the existence of our planet as our living space, or is it about time for us to come up with more reliable options to shift our decisions to some other energy sources that will not cause harm to our environment.
Now, the U.S., just like many other countries on the planet, is highly dependent on crude oil. Most cars and other forms of transportation in America require gasoline to start and keep the engine running. Americans consume a quarter of the total oil consumption in the world. The natural resources for fossil fuel are less likely to increase, and if we cannot come up with new option, we will face a BIG problem. Our oil dependence will come with 3 major issues in the United States. These include fluctuations of negative impacts in the economy, a danger to the environment, and national security risk; which I’ll dive deep on.
There are many different beliefs of how problematic this issue is from American citizens. However, only a few of these strategy plans that can turn out to be a positive cause that can bring America to a brighter energy future. T. Boone Pickens is known as an energy guru for many different reasons. This charismatic guy has introduced a more sustainable approach that will save us from the dangerous and inevitable effects of oil dependence. Such a beneficial outcome is known as the “Pickens Plan,” and it will lead us to take smarter decisions on more efficient energy sources. Instead of sticking with oil, T. Boone Pickens wants Americans to dump our bad habit of using oil for our transportation needs, and to embrace a future of natural gas.
The U.S. is one of the largest oil producing countries in the world, and we should be very fortunate living in a country with enormous reserves of natural gas. Unlike gasoline, natural gas is known as cleaner and much cheaper energy source that will not cause any harm of our environment as well as to our national security. The sole purpose of the Pickens Plan is for Americans to switch from importing, and focus on harness natural gas for transportation consumption. T. Boone explains that it’s cleaner, cheaper, and most importantly, on our soil! It will also give us more time to prepare a new generation based on wind and solar power development as well. Before we have a further discussion on the Pickens Plan, let us have a closer look at the important figure behind the plan, T. Boone Pickens.
T. Boone Pickens: Summary in a Gas Shale
Before T. Boone Pickens was known as the legendary black-gold entrepreneur, he founded and became CEO of BP Capital. In the beginning, T. Boone started his life in Holdenville, Oklahoma; in which he was born on May 22, 1928. Pickens' childhood story has clearly shown us that he was born to be a successful entrepreneur even when he was still a kid. He managed to run a paper route of 28 deliveries, then single-handedly grew it to 156 deliveries. His demonstration of growing his paper route is the tell-tale sign of the great success that he would achieve in his life.
Pickens’ spent a short stint of his youth in Holdenville, and would eventually come back up with a burning fire in his eye to build his empire. From this small town in Eastern, OK the Pickens gang moved to Amarillo, TX so his father can pursue a career in the fossil fuels industry. The business of oil seems to run in his blood since his father uprooted the family to move to Amarillo due to the Oklahoma oil decline in the 1930’s. His mom’s job was also very prestigious even before The Civil Rights Act of 1964. During World War II, she was running the Office of Price Administration. The office activities were closely related to the rationing of gasoline to citizens for 4 different counties. It should not be too surprising to see that T. Boone Pickens took the similar path as his parents.
(Welding in 1940's using Stovepipe method)
Pickens finally made it back to the place where he was born, Oklahoma, to attend college at Oklahoma State. Due to his family move to Amarillo, it made sense for T. Boone to stay in Texas to set his future in oil and gas. Pickens managed to pursue his college education with 1 year at Texas A&M right after he graduated from high school. He then transferred to Oklahoma A&M, which is now known as Oklahoma State University. In 1951, T. Boone Pickens successfully received his degree in Geology from Oklahoma State University. It didn’t take long for him to find his first job at Phillips Petroleum Co. Funny enough, after more than 3 years at Philips Petroleum, Pickens decided to become an independent geologist. Which at the time, baffled many of his superiors due to a 20-something-year-old T. Boone working by himself without any equipment, service team, or money! In 1956, he managed to establish Mesa Petroleum, where he spent 4 decades of his life building the massive organization. Let me let highlight this point 1 more time…40 YEARS running the same company without an exit. That’s unheard of in today’s fast-paced M&A business capturing investment firms. Companies get bought out in a couple of years or merge into larger private equity-backed firms in the same timeframe.
Now, being the tenacious leader that he is destined to become, Pickens led Mesa Petroleum to become one of the most well-known and largest independent E&P companies in America. Since 1964 to 1996, Pickens has pushed Mesa to come up with an impressive record of gas production. There were at least 150 million barrels of oil and 3 trillion cubic feet of gas just produced by Mesa Petroleum during the period Pickens specifically ran Mesa. The crazy thing about those impressive numbers is that it’s not even his most well-known accomplishments. He’s just getting warmed up on putting a dent on the shaping of the oil & gas industry.
What kind of strategies did T. Boone use to set himself up away from everyone else to gain such incredible accomplishments with Mesa? Pickens' ruthless ambition was clearly reflected in the development of Mesa. In developing its business, his company was reported to acquire a number of new companies. On top of that, Mesa managed to claim even a large number of smaller firms. It also showed a huge interest in the companies much larger than they were at the time. Following its recent success of acquiring a 30X cap as big as this company named the Hugoton Production Company, Mesa Petroleum used this investment of funds to accelerate itself as the largest independents in the world. However, T. Boone suffered a ton of heat of becoming a corporate raider with Gulf Oil and Diamond Shamrock scandals. Even Phillips Petroleum, the first company where Pickens started his oil career, had to become a victim of his great ambition. Even with all the pressure from the pressure of attempting to great lengths in acquiring these companies, T. Boone gained a ton of experience that would place a bigger role in his influence within the industry in his upcoming years.
Mesa Petroleum strategically uprooted to Dallas by Pickens in 1989. With this strategy, Pickens managed to establish BP Capital Management 8 years later in the Dallas/Fort Worth metro. The BP stands for his name ‘Boone Pickens’ of course (just in case somebody has been living under a rock since ’89). The company has capital equity and capital commodity ventures. Both of which are dealing with crude oil and natural gas. Pickens has shown a concern about the use of oil for America’s top energy source considering the fact that this fossil fuel is more likely to decline dramatically over a more extended period of time. Pickens describes the future of America’s energy outlook with this recent statement: “We are now spending half a trillion dollars on foreign oil, importing 62% of the oil we use, and we haven’t had the leadership in D.C. to do anything about it. We've got to move to other sources of energy. But we’ve gotten way behind, and will continue to pay the fiddler. It’s not a good future.” T. Boone believes that America needs to move on from its OPEC oil dependence and become a more independent country by using more natural gas and other renewable energy sources.
For that cause, T. Boone Pickens created the Pickens Fuel Corp. (now Clean Energy) in 1997. This organization was built to promote the use of natural gas in the transportation industry. Look, there are many forms of renewable energy resources that can be great alternatives to fossil fuel such as liquefied natural gas (LNG) and compressed natural gas (CNG). These energy sources are a cleaner burning fuel for transportation vehicles, which is much safer for the environment. According to T. Boone, it’s 86% cleaner than diesel and is environmentally friendly. Based on his experience and his research in energy, he has been working diligently to support the claim that supports the idea that oil supply is plentiful. Pickens believe it’s on the decline, and it would be best if companies start looking for other alternative fuels to grow their business. Plus it would be more valuable to take advantage of the domestic green energy sources instead of importing them from other countries at a substantial tax with tiny margins. That requires more money given to foreign countries than more money coming in for Americans growth if the U.S. were to continue this constant import of this good. The last thing we want as a country is more than 50% of our paycheck going to taxes because of the #1 most important commodity for energy on top of our other expenses.
(LNG in a nutshell)
The price of oil has caused enormous turmoil with other countries that import hydrocarbons from OPEC-sponsored nations. Most of them have to face major problems such as the slump with oil prices continually free-fall. In 2008, a number of oil importing countries had to jump into a serious economic crisis as they needed to pay more than $100 for every barrel of oil. After shocking the world with $145/barrel, the prices finally stabilized under $110/barrel. It seems that this unexpected rise in price shocked all global leaders by surprise (especially their pockets). Pickens actually predicted this event would happen long before it actually took place. Why? Because his long experience with this commodity shows in this industry, ‘you have to take the bad years with the good years .’
T. Boone Pickens vs. OPEC
Boone Pickens then shared his concerns of America’s dependence and shifted focus finding the new answer to the crude slump. Pickens has also made it clear that for the sake of his country and the new renewable energy sources should come from domestic land. Who wants be at the mercy of a fixed price for the #1 most precious resource a civilization can have? It’s pure indentured servitude
In previous remarks of 2008, Pickens decided to come up with a master plan to free America from OPEC oil dependence. His new formed group, The Pickens Plan, was established on July 8, 2008. Despite the fact that T. Boone Pickens is known as an oil billionaire, it does not keep him away from supporting his vision to use safer, healthier and more renewable energy sources. Pickens has been working hard on opening the eyes of the American people so that they understand the urgency needed to make a stand on this movement. The sole purpose of The Pickens Plan is to use other sources of safe, renewable energy that can be used in place of oil to further the energy resources of America.
The Pickens Plan also exclaims the central areas of the United States ranging from Texas, Wisconsin, and Minnesota to be a great source of natural wind. Pickens strongly believes that these areas are home to enormous potentials of even more wind energy. The great source of wind energy is the area of The Great Plains. This shift can then further increase job placements with the expansion of wind projects to add not only more growth for companies, but to lessen the stranglehold of paying more tax dollars of the American people.
T. Boone Pickens, the Philanthropist & Donor
Pickens is one of the wealthiest human beings in the world (obviously) today! Surprisingly, being one of the richest in America does not keep him from being a great charity donor too. T. Boone has given a substantial amount of his wealth to multiple non-profit organizations. This figure has already exceeded North of $700 million dollars and is climbing at record levels in his later years. And his generous acts of kindness doesn’t stop there. He managed to establish the T. Boone Pickens Foundation, which creates opportunities for youth to go to college, stay on a positive path, and eventually become contributing members of society. Not only that, his foundation has come up with a large amount of educational grants and has shown support for at-risk youth, sports, corporate wellness, and medical research to cure chronic diseases. Pickens has decided to join The Giving Pledge. Together, with other popular figures like Warren Buffet and Bill Gates, Pickens is committed to donating his wealth when he dies to The Giving Pledge.
In 2006, T. Boone Pickens was selected as a recipient of the 2006 Horatio Alger Award. This award was issued by the Horatio Alger Association of Distinguished American Inc. and the award itself is given to the people who manage to overcome adversity and humble beginnings in achieving their successes. This unique award is only one of the many honorable mentions awarded to T. Boone since he has become the greatest pioneer of big oil in North America. Not surprisingly, Pickens has also received the Texas Business Hall of Fame, the Oklahoma Hall of Fame and the 2006 Trader of the Year Award from Trader Monthly.
The Story of Struggles & Success (Like Oil Prices, Up & Down)
There is so much more about T. Boone Pickens than of the Tall Tales you read about on Southern News networks. Being a legendary money printing machine in the oil & gas is not what he strictly focused on. He is now leading a noble mission to reduce the United States' dependence on oil and to enhance the nation's foreign policies while continually balancing the fine metrics of energy optimization. Hard pill to swallow striving for energy independence from OPEC, harnessing cleaner fossil fuel sources, and trying to keep costs down low enough just to turn a profit.
Pickens has clearly stated that the dependence of this country on OPEC oil has reached a dangerously close to another bubble-bursting-market-again level. This dependence is more likely to become a very serious threat to the national security and the money in the U.S. In the near future, we foresee troubling times ahead and need to coordinate a game-plan to come up with safety-net Plan B. Developing this program is crucial to the future of energy in the Western world. For that reason, T. Boone is now reaching to experts for greater new technologies and domestic energy sources in our own domestic soil.
Pickens believes that when the nation's dependence becomes much worse with each passing day, the oil & gas associations should have a clear plan-of-action to resolve this looming dilemma. Surprisingly, the worrisome sluggish pace of the oil & gas industry to react to these emergency situations remain the same, NO PLAN.
Pickens also suggested that all companies should take their part by switching to cleaner forms of energy. Not only is this something that needs to be considered but with how safe, efficient, and cheap LNG has become, why not invest more into this source of energy? This trucking company has managed to fill the tanks of their vehicles with natural gas. It seems like this step would be a new trend in many American companies. FedEx and Wal-Mart are on the verge of taking the same path as I state this.
(2 leading industry giants above incurring huge profit loss from falling oil prices)
Why change? People have been getting the gas the same for decades! Well, good point, but we have been using gasoline to run our vehicles for too long. It’s not economical, it’s not biodegradable, and it’s not effective source of energy without processing plants refining the particular hydrocarbons. It is about time for us to start switching to some other solutions that will save us from destroying our own country's economic failing state and more importantly, OUR PLANET. Which is now killing the ecosystem from global warming & greenhouse gases. We’ve found a number of different ways to use fossil fuel like solar power, wind and natural gas. I talk about wind & solar more in depth and the things you need to do in order to not be left in the hydrocarbon dust here in this video. However, to store this type of energy is another story in itself. We will just have to wait until Tesla’s visionary Elon Musk invents a revolutionary new technology that can have the same (or better) quality of energy while generating financial easing to global consumers at the same time. Good luck Elon, it’s a big task, but someone’s got to bootstrap themselves, grow a pair, and do it.
Check This Case Study of What UPS Gained by Switching Energy Sources
UPS has clearly shared their plans and the benefits that they gain from switching to LNG. By fueling their business vehicles with LNG they can save a great deal of money on their fuel costs. Compared to imported crude, the price of the domestic LNG is a lot more effective with more ‘bang for your buck’ like savings + quality cliché to go along with it. UPS is also heavily involved with supporting green energy while supporting several environmental causes to increase the longevity of our planet. The Energy Information Administration (EIA) has clearly stated that vehicles running on LNG will produce lower CO2 emissions up to 25%.
Just because we use natural gas, it does not mean that you have to forego our daily necessities of transportation. In fact, this renewable resource is more economically efficient and greatly reduces the greenhouse gases that is killing our ecosystem. UPS has decided to increase their LNG-ran vehicles due to having a much healthier department budget to invest into other department desires. Surprisingly, these trucks regularly clock 600-miles per week that don’t limit their routes. The use of natural gas is now seen as a bridge between the independence of heavyweight gas guzzling trucks using heavy crude, to a cheaper, environmentally friendly, and effective energy source. What a jackpot of a commodity! This is again stated back into T. Boone’s ultimate vision with his Pickens Plan. The impact of the “Plan” is expected to become much grander in the upcoming years. By 2019, it is predicted that the number of company vehicles that run on natural gas will reach more than 1 million in the U. S. alone. Having more vehicles running on cleaner energy source like natural gas on earth means less destruction made of our ill planet’s future, crude prices killing off companies, and lower prices the consumer pays.
What Are We Waiting For?
Let’s dive a little bit into this “Pickens Plan” that I keep bringing up but haven’t explained. The Pickens Plan was initiated by T. Boone Pickens on U.S. soil and is meant to help America survive its stranglehold dependence on OPEC’s supreme energy control. In 2008, we already have about 200,000 vehicles in the world using natural gas as their premier source of energy. Today, the number has surprisingly jumped out to more than 16 millions in 2016 and increase exponentially year-to-year after that. Sadly, our country didn’t capitalize on a key part in this amazing energy paradigm shift. Most of energy’s growing demand is actually coming from unexpected countries like Argentina, China and Iran. Look at China, they have fossil fuels oozing out of their rich shale plays. This population dense place is now home to more than 40,000+ trucks that consume LNG but still have to stagnate their market share in the oil & gas industry because they can only import these commodities.
Take a closer look at our own backyard. The United States soil has the biggest resources of natural gas and yet there is nothing that we can do to optimize extracting these fuels to obtain healthy profit margins like the shale boom days from 2008 – early 2014….SO FAR. Unlike China, there is no need for us to import any energy resources when we clearly can get it ourselves. Isn’t that the whole reason behind ancient commerce trade anyways? I give you a coconut and you give me a banana; because your land grows bananas and mine grows coconuts. We literally have everything we need to start leaving the heavy crude and shift our focus on developing our own clean energy natural gas sources.
There are more than 8 million heavy-duty trucks in America and these vehicles could be a great segway to start the natural gas movement. We have more than enough natural gas for all those heavy-duty gas guzzlers. Of course, there doesn't need to be natural gas for sale signs in every corner of all the gasoline stations in this country to supply it. You can simply put it in a truck stop. This could lead to the following role-play: Let's say due to low cost of natural gas, trucking companies (or owner/operators) save more, which pays their workers more and gives incentives to use these natural gas facilities. That will boost the natural gas consumption up to 15 – 20 billion cubic feet per day. Today, our capacity has leveled out about 70 billion cubic feet in a day.
LNG is a serious contender to fuel consumption. The increasing demand of natural gas will boost the price of this cleaner energy source and it might just get the drills back in action. For every gallon of diesel fuel, you have to spend $4.79. Meanwhile, natural gas is only priced at $2.79 per gallon. It is quite obvious to see that natural gas is 30% cleaner while being the cheaper solution than diesel for transportation by landslide proportions.
T. Boone Pickens and the Future of Natural Gas
The Pickens Plan is all about building a bridge to a cleaner and healthier future. The use of natural gas on vehicles might also save our economic condition from a severe dependence on oil consumption. However, this noble plan is never meant to go very smooth. There would be a number of roadblocks to climb that stand in the way from many different areas of concern: geopolitical, pricing, wars, sanctions, infrastructure, etc. Way too damn complicated to say the least.
(Starting left: Host John Podesta, Senator Harry Reid, T. Boone Pickens, & Former Senator Tim Wirth)
Boone formed the Pickens Plans to remediate this major concern that is facing the OPEC’s wrath. If we wrap the ideas up, the Pickens Plan has 2 key factors. The 1st point is to boost the use of wind and solar energy to cover the electrical needs of this country up to 22%. The 2nd key factor seems to be the most important call-to-action. It has more focus on boosting the use of natural gas resources in America and replacing the crude oil as the main fuel for transportation.
But before we fast forward to the cleaner and better future for harnessing more natural gas and rule crude oil as obsolete, let us see the method to the madness that we are facing at the moment. The U.S. might be home to only 4% of the total population on the planet. However, we actually consume about 25% of the total crude supply in the world. To make this reality even more scary, there are 12 million barrels of crude oil (T. Boone guarantees that Saudis are topping production out at 10 million barrels of oil per day despite what the amount they report) that we import from OPEC countries and some other exporting countries every single day. These numbers are more likely to increase in the near future unless we make a drastic change in the way we utilize our own domestic natural resources including natural gas.
It is a fact that the United States controls many rich alternatives to fossil fuel like solar power, wind and natural gas. However, T. Boone Pickens has made it clear that LNG in the closest thing to an ideal solution to overcome the energy and economic crisis that this country is facing than ever before. He clearly added that LNG is the best-suited substitute for crude oil. Not only that, this renewable energy source is much cleaner while being cheaper, and America’s land cover large bodies of rich natural gas.
Pickens' View on Winning the War on Terror
It is more obvious to see that our country's dependence on crude oil is a great source of serious problems. Plus it damages America’s fairly healthy and stable economic condition, but it may also become a serious threat toward our national security. T. Boone states that through the Pickens Plan many experts have urged the government to stop buying crude oil from the OPEC controlled countries. If we keep following this road of having low rig counts and bankrupt upstream companies, we might just fall into a trap set by terrorists.
We are only at the beginning of the downturn of the oil & gas industry as the price of the crude oil continually falls. Today, we now even face a more serious threat from the emerging power of terrorist state named ISIS or the Islamic States of Iraq and Syria. It is strongly believed that ISIS has a secret way to fund its terrorizing activities and wars. They have benefited from illegally selling oil produced in Syria and Iraq up to $3 million per day. This has just made the problem worse as Saudi Arabia is still insisting on practicing its geopolitical policy in determining the price of the crude oil and their market share. A few years ago, there were some serious questions about the policies of the United States and some other oil importing countries. Their importing act is almost the same as funding the terrorism and its expansion of ISIS as one of the greatest threats in the world. Yet their oligopoly on the market leads many bending to the will of their desires without question. Why is that? Why is it that 1 commodity encapsulates the power to create a worldwide superpower? We will go over these questions later, just think about them and let these concerns burn inside your brain. Their extremely important to be successful in the oil & gas industry. The problem is that we find it really hard in differentiating the crude oil produced by Abu Dhabi Kuwait from the one produced by ISIS once they are loaded on the tanker.
ISIS and its oil production is not the only problem that we have today. Al-Qaeda is more than ready to make things worse if it ceases such a slick opportunity to disrupt the oil shipments. There are a number of “choke-points” that can be a sitting duck for Al-Qaeda followers and the Strait of Gibraltar and the Strait of Hormuz are among some to name a few. Simply put, purchasing more oils from the Middle East could also mean supporting and funding the most threatening terrorizing countries and their activities. So what does this all mean? More threats and intimidations to America’s Homeland National Security from OPEC with these policies set in stone.
T. Boone’s Conclusion on the Oil Pricing Slump
It does not have to be this way. We can put an end to both our sad crude oil dependence and our expensive war on terror by shifting to use more natural gas in many aspects of life (T-R-A-N-S-P-O-R-T-A-T-I-O-N). There would be no need for us to keep importing fuels from other parts of the world as we already have plenty in our backyard. Not only that, this cleaner and cheaper energy source can be a key point to overcome our future energy problems which are HUGE drivers to end the tension with OPEC.
So where does this leave us? Will crude rise in the meantime and how much is the oversupply? T. Boone recently did point out that the world is currently using just about 95 million barrels per day, and is only oversupplied by almost nearly 1 million barrels of oil per day. Now, T. Boone does not believe that it will take much to balance the market. When that occurs, the price of crude will move up fast. And with T. Boone being the most successful oil & gas entrepreneur while becoming the most famous pioneer of the industry, would you doubt his optimistic outlook?