From the October 01, 2010 issue of Futures Magazine • Subscribe!

Sometimes it takes a man

ImageT. Boone Pickens has spent his life shaking up corporate America. So it's no surprise that once again he's striking terror into the hearts of energy companies.

When I interviewed him back in 1986, he was the "corporate raider" who helped restructure the oil industry. Today, he is using his business and government insights to curb the U.S. addiction to foreign oil and move it to natural gas, of which we have deep reserves. Imagine: we no longer would be beholden to OPEC, no longer embroiled in Middle East wars, no longer polluting the planet with poisonous gasses.

This might seem like a dream, but it's the vision of a man who has combined his energy know how, business acumen, political leverage, and, yes, desire to profit to push an idea whose time has come...and is past. As he says to why the United States hasn't been able to create a comprehensive energy plan: lack of leadership and cheap gasoline.

Pickens is known for his candor. In his interview with Managing Editor Dan Collins (see Boone: The man with a big plan), he is up front with why the United States needs rehab, fast. "The people who have the oil, most of it, are not friends of ours; 40% of the oil we import is from countries the State Department recommends we don't visit, which tells us they're not friends. Why would you put yourself in a spot where you are dependent on oil from the enemy?"

As you read this, the House will have or will be ready to vote on HR1835, which gives a $65,000 tax credit for 18-wheelers that use natural gas for fuel. His vision is for transporters and the government to switch to natural gas for fuel, and he states that as 70% of oil usage is transportation, this would be a huge step in steering the country toward energy independence. He told Collins :"If you do nothing, you are going to be faced with $300 per barrel oil in 10 years, you will be importing 75% of your oil and you will be more dependent on OPEC than you are today."

Keep in mind that Pickens understands value, not only of companies, but of commodities. He's a long time trader who began using futures in the 1970s when his old firm, Mesa, was in the cattle business. At one point Mesa was the second largest owner of cattle in the United States, and as he told me in 1986, "you don't always want to be speculating in a commodity at that magnitude." Thus, they hedged with futures.

He also said he actively traded for his own account, using the markets because, as he said, "I can get in and out of [them] quickly." Today, Pickens is chairman of BP Capital Management, a successful $4 billion hedge fund with a focus on energy investments. With a huge stake in the natural gas (and water) world, it's no wonder he is pushing a natural gas plan. But his reasoning in moving to an alternative energy plan -- and putting his weight behind it -- makes sense. In his blunt way, he noted, "if we don't use natural gas for serious transportation fuel, we are going to go down as the dumbest crowd that ever came to town. Why wouldn't you replace dirty-foreign-expensive with cheaper-cleaner-domestic?"

With crude oil skirting $75 per barrel and natural gas as low as $4 MMBtu, it's time to think seriously about using our home field advantage. If Congress votes to move the plan forward, something of which Pickens is optimistic, it might be the first legitimate step to U.S. energy independence. And picture this scenario: in 10 years, if the United States has reduced -- significantly -- its need for Mideast oil, the air is cleaner and our soldiers are out of harm's way, we could say it was largely due to a futures trader using old-fashioned leverage.

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