REBECCA QUICK, CNBC ANCHOR: Welcome back, everybody.
President Obama is calling for Congress to eliminate what he calls unwarranted tax breaks for the oil and gas industries, setting high oil and gas prices right now. Meantime, alternative energy may be gathering some steam.
Boone Pickens is among those backing a bipartisan bill offering tax breaks for natural gas vehicles. He actually introduced this legislation -- campaign running for a couple of years.
And Boone, thanks for coming in today.
BOONE PICKENS, BP CAPITAL MANAGEMENT CEO: Thank you.
QUICK: This is known as the Boone Pickens bill. And at this point you said you have 178 co-signors. We talked to you when this legislation first dropped in the house a few weeks ago.
Where does it stand right now? How has it been moving along?
PICKENS: I`ve had a lot to do. You know seems like plates full all the time. And so we`ve got to get into it. I think -- I`ve got a pretty good chance they`ll vote on it by mid-May.
QUICK: And you expect it`ll pass the House, but then what happens in the Senate?
PICKENS: It`ll pass the House. This week I think we`ll go over 200 co- sponsors. And the beauty of it is there are 50/50, Democrats and Republicans. So this is -- it`s not a partisan issue.
QUICK: But you expect that the Senate will act on it and then the president will sign it if it gets through?
PICKENS: I think we`ll make it this year.
QUICK: You do?
QUICK: And this bill --
PICKENS: But I`m not going to quit if we don`t.
QUICK: You`re not?
PICKENS: No, I`m going to go -- I`m staying until the finish line.
QUICK: You know you have been talking about this for several years at this point. A couple of years.
QUICK: It`s your first -- couldn`t remember if it was two or three years.
PICKENS: July of `08.
QUICK: Yes. And I remember you talked about it right here on this program when you launched it. This is a program to get 18 wheelers converted to natural gas because your point in all of this is that we have to wean ourselves from foreign oil. How does that debate --
PICKENS: Well, you`ve got the to start somewhere. And you know if you sat down and looked at all the way -- the way we haven`t managed energy in America. That if you looked at it, you`d cry. So you`d say, OK, having cried, now what are we going to do about it?
You`ve got to get on something. You`ve got to make something happen. You can`t just sit there and yet take more and more oil from the enemy. And we`re taking five million barrels from OPEC every day. Take the eight million trucks, go to natural gas, you can cut OPEC in half.
But the thing I would like to comment about is that today if I announced that we have more oil equivalent than the Saudis do, I would be telling you the truth.
QUICK: In the United States. Continental United States.
PICKENS: In the United States.
JOE KERNEN, CNBC ANCHOR: Natural gas.
PICKENS: Natural gas. I mean this isn`t my number. This is other people`s.
KERNEN: That wasn`t the way it was five years ago, but that`s -- because of fracking and everything, we`re there.
PICKENS: That`s right. You`re there. You`re there. I say you`re going to recover 4,00 trillion which is 700 billion barrels. The street --
KERNEN: Four quadrillion.
PICKENS: Yes. They`ll give you -- I mean Tom, Dick, and Harry will give you 2,000 trillion or 2,000 trillion is 300 billion barrels and that is bigger than the Saudis. And this is the cleaner of the hydrocarbons. It`s 130 octane right out of the ground. Does not require refinery. It is the premiere hydrocarbon, and we`ve got it. And nobody stands up and says that.
QUICK: Well, Boone, we had Donald Trump on the show a few weeks ago. And he said that the problem here is we don`t know how to negotiate with the Saudis. We just need to tell them what we`re willing to pay. Tell --
PICKENS: Donald doesn`t know what he`s talking about on oil. They have the oil, we have 2 percent of the oil. So what are you going to do? They have the oil, you`re going to go tell them what they`re going to sell it to you for?
They`re now maxed out at about 88 million barrels a day, and your demand in the fourth quarter this year is 90. The only way you`re going to kill the 90 is with price. So you`re going to see the price go on up is what`s going to happen.
DAVID FABER, CNBC ANCHOR: You think price is going up from here?
PICKENS: It has to, David, because if I`m right on supply, people keep thinking that OPEC has an unlimited amount of oil. They do not have.
QUICK: Saudis just cut production, though.
PICKENS: Pardon me?
QUICK: Saudis just cut production. They said they --
PICKENS: Well, now they`ve brought it back up again. You saw where they cut it one week and then came back the next. I mean they`re showing you -- you know it`s a lot of action. Watch my feet, you know. It`s --
KERNEN: But, you know, usually we don`t run out of things. And price solves things, and if prices stay high, we`ll find more oil, too, and we`re finding more natural gas.
PICKENS: Well, I know --
KERNEN: That`s the way it`s always been.
PICKENS: Well, you`re an economist.
KERNEN: No, I`m not.
PICKENS: I always thought you were. You know what an economist is.
KERNEN: No, I`m a drunker. No, that`s not -- (INAUDIBLE). No, I`m not an economist.
PICKENS: But you know what an economist is.
KERNEN: Someone who has 100 different way to make love to a woman that doesn`t know any girls?
PICKENS: All that, and -- but an economist is a guy that doesn`t have enough personality to be a CPA.
KERNEN: And if you line them up, they can`t reach a conclusion. No, I know that. But I`m not an economist. But you know, in the past, prices --
PICKENS: That`s the way it`s supposed to be.
PICKENS: That`s the way it`s supposed to be.
KERNEN: We didn`t run out of stones.
PICKENS: No. You didn`t -- that is true. What I want to do is get off the OPEC oil and get our troops out of Afghanistan.
KERNEN: I agree.
PICKENS: And get the hell home. We don`t even know what we`re doing over there.
FABER: Yes, you know, we have not had a significant piece of energy legislation come out of Congress in a long time.
PICKENS: How about 40 years?
FABER: We were close. We were pretty close.
PICKENS: In `78.
FABER: We`re also close a couple of years ago and --
FABER: The senator in the Senate and then it all fell apart. You were part of a lot of those conversations. And what gives you the confidence that even a modest bill, you`re now sort of behind is going to ultimately to see the light of --
PICKENS: OK. I decided in July of `08 when I launched the Pickens plan, I said I`ve got the money and nobody`s going to explain energy to America, I`ll go do it. I`ll spend $82 million out of my pocket on the deal. And I think I`ve done a pretty good job of explaining.
Actually, we have only one resource that will replace. That ain`t exactly right. But one resource for heavy duty trucks that will replace foreign diesel, natural gas. That`s the only one you have. So it`s not hard if you have just one resource to figure it out. But I want all American.
I`m ready for hybrid, I`m ready for anything, I`ll take ethanol. I`ll take anything but OPEC oil because the security of this issue is -- I mean, you can`t even figure out -- figure it up how bad it could be.
FABER: Just say it though. It figures into everything.
PICKENS: Well, Saudis go down, you`re looking at $300 to $400 oil.
FABER: By the way, I mean, obviously, that`s not necessarily something that many people expect, but given the turmoil in the Mideast has to be something on people`s minds. You believe $300 to $400 if in fact the Saudi regime were to fall?
PICKENS: I sure do. Yes, you`ll get it quick.
QUICK: What about with (INAUDIBLE). You said prices are going higher anyway.
PICKENS: Well, you`re sitting over there, the Chinese are still trying to fill their strategic supply. So they`re in the market all the time for oil. And their economy`s not slipping. So they`re -- you got a demand there. And ours is holding up. But our industry has done a good job in this country.
If you look at it, we`ve actually increased our production by 400,000 to 500,000 barrels a day. We were in decline from 1970, when we`ve peaked to 10 million barrels in the United States we`ve been in decline ever since. Our industry is turned around here.
FABER: Well, that goes to Joe`s point, though, that somehow there always seems to be a way --
PICKENS: OK. But, David, the deal is so huge. We`re using 20 million, 21 million barrels a day, producing seven, importing 13.
PICKENS: The hill you`ve got to climb is like this. It isn`t like this. I mean, you have got to find one hell a lot of oil to start to --
FABER: In terms of the infrastructure and everything that would need to be put in place to produce the amount of natural gas were we to ultimately move to a much more focused on that fuel, is it there now? I mean -- you know I know there`s a lot of shale ownership out there and a lot of companies going to work.
But are we already there in terms of the ability to produce?
PICKENS: Yes. We`re getting there pretty fast. But don`t worry about them. I mean, you`re talking about an industry that can function. And so just -- I don`t want to take any tax away from it. If you take that IDC away from it, you`ll CapEx 30 percent. That`s your result.
KERNEN: Boone, you know all the -- we hear the president talk about investments, investments in infrastructure, but renewable energy. That`s - - you hear that constantly. Do you think that he should shift gears and when he talks about it just throw all of his energy into natural gas and then that could be a bridge to when this other technology finally comes of age where it`s economically feasible?
Because most of it, you`re not going to drive to work on solar power, you`re not going to drive to work on a windmill.
QUICK: Stop. I never said that.
KERNEN: Sure. I know you didn`t. You can`t drive to work with a windmill. So I mean that would almost make sense to me if you said we`re going to build out the infrastructure to do the natural gas conversion.
PICKENS: Let me say, I don`t want you bailing out the infrastructure.
KERNEN: You want private sector to build it out.
PICKENS: Yes, sir.
KERNEN: But if the government is going to be in anything --
PICKENS: I want to -- I want him to give direction is what I want. I want him to stand up and say we`re going to go with natural gas for heavy duty trucks. With that there`s going to be $1 billion a year for the -- for those trucks, incremental difference, a cost of --
PICKENS: OK, but $1 billion a year for five years and then kill it.
KERNEN: Can you talk to him, please?
FABER: I`ll try.
PICKENS: Go out on it. I mean finished sunset. $5 billion gets you 143,000 trucks out of eight million. Will that solve it? No. What it`ll give us is America will see, the president of the United States as a leader. And he said this is the way we`re going. We`re going to our resource, to our energy, and we`re going to get off -- he said when he received the nomination in July, I was there --
KERNEN: Every president has said it, though.
PICKENS: But you know what he said? He was specific and said, in 10 years we will not import any oil from the Mideast.
QUICK: Over three years in, how is he doing so far?
PICKENS: Well --
KERNEN: He`s got to be nice.
PICKENS: Well, listen, I think the guy is with me. Because he said the last energy speech he made he mentioned my name and said natural gas. So I think, you know, he`s hearing the music.
KERNEN: Did he say natural gas or did he --
PICKENS: You know what he said.
FABER: The last speech also --
PICKENS: This is serious.
FABER: Was back to speculators. Like every president promised we`re be off the oil, they also all blame speculators every time the price of oil goes up. What role do you see in terms of speculation? In terms of adding to the ultimate price of oil?
PICKENS: Well, most of your viewers and you certainly understand when you have somebody that is speculating, they`re investing. I mean, if I go out and buy 100 shares of GE, I`m a speculator in GE stock.
I mean, I expect it to go up and not down. Nobody ever bought to break even. And so on speculation of energy contracts, I mean they buy 100 contracts, there`s a seller. Somebody thinks it`s going down. I mean it`s a balanced market all the time.
You know I was asked before committee in Washington, they said back in the crash of `08 said, you know, that you were investing. Yes, I was investing. Well, you ran it up and dumped. I said, really? I said now, who do I dump to? Well, you dumped on this poor guys walking down the street.
KERNEN: We got to go. I just don`t think natural gas has gotten the respect it should -- we`ve got to go. But --
KERNEN: A renewable energy. I just don`t think it has.
PICKENS: The renewable energy has not?
KERNEN: No, that natural gas hasn`t gotten the respect it has to answer our needs for renewable energy.
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