Oil Could Hit $120 a Barrel: Boone Pickens

Oil prices, now topping $100 a barrel, could hit $120, energy financier T. Boone Pickens, chairman and CEO of BP Capital, and an advocate of replacing oil with natural gas in some applications, told CNBC Friday.

“Be careful counting on the Saudis,” said Pickens, a wildcatter who first gained notoriety in the 1980’s as a corporate raider. “They [the Saudis] claim they can produce 12 million [barrels] a day. They won’t let anybody audit the reserves or the production, so you’re totally at the mercy of what they tell you they can do.”

He said the Saudis naturally have an “interest” in supporting higher oil prices, but to a certain limit. “It won’t go to $150,” he added. “If it went to $110, $120, I don’t think anybody over there would get excited about it.”

Pickens reiterated that the United States needs an energy policy that addresses lessening OPEC-dependence.

“We have no energy plan for America, and we use more oil than any country,” said Pickens. “We use 22 or ‘3 percent of the oil with 4 percent of the population. That’s not sustainable. And why in the world can’t we get some legislation to get us on our own resources?”

Answering his own question, Pickens said that the (political) leadership in the United States doesn’t act until oil prices rise to a level that erodes the American family’s budget.

About natural gas, Pickens said, “One MCF of natural gas will do as much work and provide as much energy as seven gallons of diesel. Seven gallons of diesel is $25, one MCF of natural gas is $4. We look like fools that we’re not using this for heavy-duty trucks in America.”

Pickens has a vested interest in proposing increased use of natural gas, because some of his stakes in companies would go up in value if use of the commodity were to rise.