T. Boone Pickens on Yahoo and the Price of Oil

by: Kirk Lindstrom August 10, 2008 | about stocks: DUG / OIL / SPY / USO / XLE / YHOO    
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Kirk Lindstrom

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Billionaire oilman T. Boone Pickens was on CNBC Friday. Here is a synopsis of his comments about oil (charts) and Yahoo (YHOO). Boone said demand for oil is being killed in the US and Europe so the price of oil has come down.

click chart (courtesy of stockcharts.com) to enlarge   

More Crude Oil price charts here.

Boone Picken's Energy Plan:

Joe Kernan asked Pickens "you paid for the Swift Boat ads and now the left is using your 'we can't drill our way out of this' statement. How do you feel about that?" Boone said.

  • "You can't drill your way out."
  • "You have to have everything."
  • "Anything American I am for."
  • "I'm for Biofuels. I'm for electric. I'm for hybrids. I'm for OCS. (Boone is for drilling on Outer Continental Shelf)
  • I'm for everything American!
  • I'm obsessed with it. I'm going to get the $700 billion figure (the amount Americans send to foreign governments to buy oil) down.
  • ANWR: YES, YES, YES! (Boone is for drilling for oil in Alaska National Wildlife Refuge)
  • "Anything American, I want to do it."
  • See more at www.pickensplan.com

Pickens On the Price of Oil

Boone is still long oil but he says his positions are "not as long" as they are before.

  • Sold $85 call
  • Bought $70 Call
  • Sold $60 put
  • I'm staying in those positions

That is not very long. With oil now at $117, buying a $70 call was good but he locked in a $15 gain by selling a call at $85 which left the additional $32 of upside ($117-$85=$32) on the table. If oil stays above $85 before his options expire, his gains from being "long" are the premium from selling the $60 put plus the $15 call spread.

In a past appearance, he said he was short oil at about $100 and I believe he said in another appearance he covered that short around $108 for a loss. Pickens may believe $85 was the high end of oil's trading range without a speculative bubble. This would agree with another noted oil analyst Charlie Maxwell's belief that oil would trade between $50 and $80 and hit $85 by 2010 (see here).

On Yahoo! 

  • "I got out of Yahoo!"
  • "The management is pathetic." He said if you give them a multiple choice question they get the wrong answer every time.

Pickens wants to work as a general for either McCain or Obama so he can be nonpartisan in helping with the oil crisis. After attending several town hall meetings, Pickens says people in America don't believe they are being told the truth about energy in America. Pickens said he will be back as a guest in about a month.

Disclosure: Author holds a long position in SPY

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This article has 14 comments:

  •  
    Aug 10 10:00 AM
    Definitely, I believe it is mandatory that this country get to a transportation system fueled by American energy sources.

    So long as it is produced and controlled by Americans in America, be it wind, wave or compressed natural gas,etc, we need and must stop that annual 700 billion hemorhaging that's currently taking place.

    As painful as $4.00 gasoline prices are to our economy, the real cost rests in the loss of control of our economic destiny while simultaneously funding worldwide terrorism. There cannot be independence with dependence on an energy source that we do not have, should not want and certainly cannot afford.

    Oil wars are frankly not nearly what they were thought to be.
    Reply | Link to Comment
  •  
    Aug 10 10:28 AM
    Don't be too sure. If we don't curtail our energy dependence, we could be in one hell of a (shooting!) oil war. This fuel has played a major role in warfare since it was discovered, and there's no reason why that would change now.
    Reply | Link to Comment
  •  
    Aug 10 04:41 PM
    if oil goes down too much, opec and saudi arabia will probably decrease production. we need to move faster to get away from using so much oil.
    Reply | Link to Comment
  •  
    Aug 10 07:10 PM
    I like you thinking Alamo. I am in that camp also. get us off foriegn dependence. I also fear the Saudis will increase pricing. They are going to get some more. I don't think we can do it fast enough. We are behind the eight ball and need to build our energy infrastructure out quick as possible. We have to get that shovel in the dirt. Much more than we have now. It will take time. It is our destiny to wean off foreign oil. It is here all resources exist and the technology to achieve is also right here on our soil. The world knows it. Boone will put up big dollars and that is the start. I am in full bore.
    Reply | Link to Comment
  •  
    Aug 11 08:43 AM
    Alamo you are 100% right. We need to first drill in Alaska to immediately stop the dependence on oil while we figure out a natural energy source (solar, wind, natural gas, etc.) as the oil reserves in Alaska would not be a long-term solution, only a temporary ween off of foreign dependency.
    Reply | Link to Comment
  •  
    Aug 11 10:32 AM
    not being told the truth.....duh! tat been going on the past 100 years!
    Reply | Link to Comment
  •  
    Aug 12 04:06 PM
    You guys have some wild ideas.

    Do you really think drilling in the ANWR is going to produce energy independance? You import 10 million barrels a day. Thats all of the imports from Canada, Saudi Arabia, Venesuela etc. Sorry but the ANWR will never produce 10 million barrels a DAY. You guys are dreaming.

    Real energy independance would take 50 years, 100 nuclear plants and a conversion of all cars from gasoline to another energy source. Sorry fellas, but ethanol isn't the answer either.
    Reply | Link to Comment
  •  
    Aug 12 04:09 PM
    Energy Independance is election rhetoric aimed at getting votes. Its totally improbable in the near term (ie, 20-30 years).
    Reply | Link to Comment
  •  
    Aug 12 04:14 PM
    I apologize for being so cynical, but I don't think that GOVERNMENT tells the truth. Even if a credible individual such as Pickens were nominated for an "energy czar" position - congress would hire our friend Benny' from the Federal Self-serve instead..
    Reply | Link to Comment
  •  
    Aug 12 07:42 PM
    I don't get the wealth transfer statement. We use our money to BUY oil. So what. We trade our paper money for a product. Don't we do that with everything we buy. And the reverse on things we sell. Yes, we are paying more for oil now. But we pay more for lots of stuff then we used to. What is the point?
    Reply | Link to Comment
  •  
    Aug 12 07:47 PM
    I also don't understand why Boone needs to waste money on his TV commercials. Okay, Boone do whatever you need to do to get alternative energy business going. Just do it. You don't need to tell us right now. Forget the Government. Just start your company and let investors foot the bill by issue stock and bonds in your venture. The government has no business using taxpayer money for any business venture. That is what the capital markets do. It is capitalism. It is risk/reward.
    Reply | Link to Comment
  •  
    Aug 22 01:12 PM
    ValueInvestor, you're an idiot. My guess is that you're just another clueless liberal, tree-huggin' environmental democrat. Same old story... you're against everything that has reason, logic, and sanity. People have got to realize that the interesting thing about those in same camp as Idiot ValueInvestor is that he (and they) has/have no realistic ideas about to fix things. For the most part, all they do is work against capitalistic, free-enterprise, reasonable, logical thinkers.
    T Boone's plan is correct. It's not something that is rocket science. It has clarity, logic, environmental friendliness, and it is great for America. Go TBoone and God Bless the market of free enterprise, capitalistic, reasonable, intelligent thinkers who are pro-USA.
    Reply | Link to Comment
  •  
    Sep 05 06:35 PM
    LOL FreeEnterprise, I'm not an idiot, I'm a realist. Those claims made by Pickens are economically not realistic in the near term. There is way way too much invested interest in oil and the current infrastructure to change things immediately. I'm all for weaning ourselves off oil and moving to more enviro friendly alternatives, but I don't think it would happen in the next 20-30 years.

    Besides, your precious T. Boone went long oil in the $140-145 range. Hows that working out for him?
    Reply | Link to Comment
  •  
    Sep 23 01:29 PM
    Something else for you to ponder FreeEnterprise:

    If you go to Boone’s website, and see his goal of displacing that amount of foreign oil with “alternatives” (which his biggest one is clearly stated as natural gas) , we’d already be there. What’s even more absurd in the energy debate is the fact that Boone also correctly states on his website that every one of his giant wind turbines produces energy equivalent to just 12,000 barrels per YEAR; yea per YEAR, not per day. That equals the equivalent of 32 barrels per day per windmill, nearly equal to a stripper well in America today. That means you’d need 31,250 giant wind turbines 24/7 year round in constant wind, to equal 1 million barrels per day. What a farce! Where would we put 31,250 wind turbines???? The greenie freaks would scream “Not in my backyard” across America.
    Reply | Link to Comment
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