Oil and Gas

US Doesn't Need an Oil Reserve--Get Rid of It: Pickens

3 Golden Rules For US Energy: Pickens

The U.S. energy industry needs to be significantly reformed, including an evaluation — or complete elimination — of its strategic petroleum reserve, BP Capital founder T. Boone Pickens told CNBC on Tuesday.

Boone Pickens, Chairman, BP Capital Management
Adam Jeffery | CNBC

The reformed Texas oil man is now one of the biggest proponents of alternative energy. Pickens touted his own three "golden rules" for the country's energy policy, which he says should include getting rid of "archaic" taxes that are a barrier to developing natural gas, re-examining or ending old energy programs such as the SPR and creating a formal "North American Energy Alliance" with Mexico and Canada.

Pickens said eliminating the SPR, the linchpin of U.S. efforts to stockpile oil in the event of an energy shock, would save the country "one heck of a lot of money." Created in the wake of the 1973 OPEC oil embargo, the SPR has several sites across the U.S., holding nearly 700 million barrels of oil.

"Tell me the case where you need it?," he said of the reserve. "Things have changed. Resources are better understood," Pickens said."You may not want to take all the SPR out" but the system is ripe for reform, he said, adding that its ability to offset a loss of oil may be overstated.

The SPR has been the source of controversy in the past. While its ostensible purpose is to blunt potential market shocks, presidents are known to deploy oil stocks to alleviate skyrocketing domestic energy costs — thus drawing criticism that the reserve is being used for political purposes.

And because the U.S. frequently buys crude for the SPR stockpile, accumulating oil at market prices can be a costly endeavor — particularly when oil surges above $100 per barrel.

The U.S. "has no energy plan," he said. "There isn't anybody in Washington that looks at these [policies] and says 'Maybe we don't need these any more.'"

Through the "Pickens Plan," the billionaire energy entrepreneur has for years advocated that the U.S. rely solely on its own resources, instead of foreign oil, as a means of boosting the economy.

"We're the only country in the world without an energy plan.Let's get one," Pickens said. He also advocated creating an "energy alliance" with fellow North American economies Canada and Mexico.