Pickens stands by energy plan despite oil drop

Reuters

OIL TOIL: Crude oil prices could rise to over $US125 a barrel in the near future, says legendary oil investor T. Boone Pickens.

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Texas energy tycoon T. Boone Pickens said his plan to cut US oil use by converting cars to run on natural gas after boosting wind and solar power hasn't suffered despite a 23 percent drop in crude prices since July.

"Why should it? You can't change something in a matter of a few weeks," Pickens said in a telephone interview. "We're importing way too much oil, whether it's US$120 or US$150 a barrel, it doesn't make any difference."

Pickens revealed the plan – which envisions spending billions on turbines and transmission lines to tap the country's most blustery corridor from Texas to North Dakota – and launched an advertising campaign last month.

A massive move to wind power – and solar power in the Southwest – would divert natural gas from being burned for power and make it available to run vehicles, according to the plan. It also calls for more drilling of domestic oil.

Crude oil briefly fell below US$113 a barrel on Thursday, after hitting over US$147 on July 11, as high fuel prices dampened demand in the United States, the world's thirstiest consumer of motor fuel. The US Department of Transportation said this week vehicle travel declined for the eighth month in a row.

"All of those things help, and it's good for the country for them to happen, but you still have to do something about your (oil) imports, which are still almost 70 percent," said Pickens, who has met with governors from wind corridor states Oklahoma, Kansas and Montana in recent weeks.

Pickens said oil prices may drop even further, to US$110, sometime in the next few weeks, but won't dip below US$100, and that the price will dog the United States for decades unless it adopts a plan and sticks to it. The United States dropped ambitious plans for solar and wind power after petroleum prices fell in the 1980s.

"In the past that's what happened when the price went down, all the plans stopped," he said.

The lifelong Republican hopes to make energy the top issue in the US presidential campaign. He has not come out in favour of either candidate yet.

"(Barack Obama) doesn't have any plan yet that would reduce the imports," he said "Neither one of them do."

He said he was surprised John McCain hasn't yet suggested tapping the Arctic National Wildlife Refuge for crude despite his strident pleas for more domestic oil drilling now.

HEDGE FUND

While Pickens' plan may be holding strong as the wind industry grows, all of his investments in the old energy economy may not. Pickens' hedge fund BP Capital, which manages about US$7 billion in assets, sank about 35 percent in July as it took a beating on oil and natural gas bets, according to a report this week in the New York Post.

Pickens declined to comment in the interview about the performance of his fund. He said the fund would give "a full report" about the quarter at the end of September.

He has hedged his bets, however, and stands to benefit from the plan. He's building a US$10 billion wind farm in Texas that should start generating power by 2011. He's also invested in a company that converts cars to run on natural gas.

- Reuters