T. Boone Pickens on Yahoo and the Price of Oil

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Includes: AABA, DUG, OIL, SPY, USO, XLE
by: Kirk Lindstrom

Billionaire oilman T. Boone Pickens was on CNBC Friday. Here is a synopsis of his comments about oil (charts) and Yahoo (YHOO). Boone said demand for oil is being killed in the US and Europe so the price of oil has come down.

click chart (courtesy of stockcharts.com) to enlarge   

More Crude Oil price charts here.

Boone Picken's Energy Plan:

Joe Kernan asked Pickens "you paid for the Swift Boat ads and now the left is using your 'we can't drill our way out of this' statement. How do you feel about that?" Boone said.

  • "You can't drill your way out."
  • "You have to have everything."
  • "Anything American I am for."
  • "I'm for Biofuels. I'm for electric. I'm for hybrids. I'm for OCS. (Boone is for drilling on Outer Continental Shelf)
  • I'm for everything American!
  • I'm obsessed with it. I'm going to get the $700 billion figure (the amount Americans send to foreign governments to buy oil) down.
  • ANWR: YES, YES, YES! (Boone is for drilling for oil in Alaska National Wildlife Refuge)
  • "Anything American, I want to do it."
  • See more at www.pickensplan.com

Pickens On the Price of Oil

Boone is still long oil but he says his positions are "not as long" as they are before.

  • Sold $85 call
  • Bought $70 Call
  • Sold $60 put
  • I'm staying in those positions

That is not very long. With oil now at $117, buying a $70 call was good but he locked in a $15 gain by selling a call at $85 which left the additional $32 of upside ($117-$85=$32) on the table. If oil stays above $85 before his options expire, his gains from being "long" are the premium from selling the $60 put plus the $15 call spread.

In a past appearance, he said he was short oil at about $100 and I believe he said in another appearance he covered that short around $108 for a loss. Pickens may believe $85 was the high end of oil's trading range without a speculative bubble. This would agree with another noted oil analyst Charlie Maxwell's belief that oil would trade between $50 and $80 and hit $85 by 2010 (see here).

On Yahoo! 

  • "I got out of Yahoo!"
  • "The management is pathetic." He said if you give them a multiple choice question they get the wrong answer every time.

Pickens wants to work as a general for either McCain or Obama so he can be nonpartisan in helping with the oil crisis. After attending several town hall meetings, Pickens says people in America don't believe they are being told the truth about energy in America. Pickens said he will be back as a guest in about a month.

Disclosure: Author holds a long position in SPY

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