T. Boone Pickens may still have some relevance in the media and in oil circles. And he may not. The oil magnate made a call late yesterday that oil could be back at $100.00 per barrel by the end of 2010. It seems that all these supply cuts are being noticed by him (and others) and this recent pop from the Middle East tensions gave another chance to kiss the kiss the pig at the town fair.
Pickens made yet another huge name for himself in 2007 and 2008 duringthe boom. But he rose the horse too long, and his fund lost "threecomma’s in dollar value". He lost his shirt as oil went south, andsome even have gone as far as noting that his own grassrootsPickensplan.org only added more pressure against his own best interests.
His own natural gas to an alternative fuel for autos stock called Clean Energy Fuels Corp. (NASDAQ: CLNE) has already recovered about 100% from lows. But its is still down close to 70% from its highs.
What is more and more evident is that these markets were grosslyinflated by cheap leverage that is now gone. The eight to one andtwelve to one leverage days are gone. But even still, Israel and Gazahave proven that uncertainty and strife can cause these markets toskyrocket. Israel and Gaza don’t even have any oil except for whatthey buy. So imagine if there is another conflict.
If the recession ends quicker and more smoothly than many expect, thendemand will likely recover. There has been demand destruction and eventhis last plummet in oil prices hasn’t revived the truck andgas-guzzler auto market. The question is how long it will last.
No one knows where oil will definitely trade. We all have predictionsand we all have assumptions. But $140 per barrel was a hoax. Now itseems that oil in the low-$30’s again might have just been a gift.Pickens may be right. He may not. But you can bet he’s probably"talking his book" and it seems he doesn’t want to go away any timesoon.
Jon C. Ogg
January 7, 2009