Some relief at the pump this week. It may not last long. This morning gas prices are down six cents from a week ago and it's two cents lower than a year ago, continuing yesterday's trend when for the first time in two-and-a-half years when the current price dropped below the price a year earlier. But analysts expect they could increase again before Memorial Day weekend. They do every year, right?
This morning on "Starting Point," BP Capital Management founder and chairman T. Boone Pickens explains why no one person is responsible for the gas prices. He also explains why the tax code needs fixing and why the Keystone XL pipeline makes sense. Read on to see his comments.
Here's an excerpt from the interview:
ROMANS: You like wind and solar and natural gas. Who has –
PICKENS: I like all-American.
ROMANS: You like independence from foreign oil.
ROMANS: Who's got the best plan of those two guys?
PICKENS: I do.
ROMANS: Are you running for president, sir?
PICKENS: I'm telling you, I've got the best plan. It's a simple plan. The first thing is quit blaming someone for the price of gasoline. That's all set by cartel, which is OPEC. That's it. And they have the swing all. They produce 31 million barrels a day. They are going to call the shots. They've already told you they have to have $100 a barrel because of social commitments within their country paying off the people –
ROMANS: I talked a vice president from FedEx, and they're using more oil than we are going to use. We complain what we pay at the pump he's saying what you are saying - get used to it. The needle is not being moved by the United States. What about the keystone pipeline. Also very political. Should we do it?
PICKENS: Of course you should do it. The Saudis claim they have 250 billion barrels of oil. They don't. Probably 150, 175. But there's 250 billion barrels in Alberta, and that's the pipeline. That's Keystone.
BROWNSTEIN: We're down from 60 percent on foreign oil to 45 percent in 2011, what's been improving that number and what's been driving and what do we do to move it down further?
PICKENS: The economy is down, demand is down. If you want is it step down on the economy, you can cut demand more. But the oil and gas industry in the United States has done an outstanding job. The oil and gas industry in this country has gotten out there, found oil, found gas. We had the cheapest - just a second. We had the cheapest energy in the world, the cheapest. Nobody is cheaper than we are.
BROWNSTEIN: Real quick, the other after 20 years of stalemate we have been increasing fuel economy standards. What's the role that's playing?
PICKENS: That's great. Anything that conserves helps the economy and the price of fuel. But you're getting ready to have the gasoline price - hang onto your hat.
FUGELSANG: Keystone, most of that oil would go to China and India. We're exporting so much oil right now while prices are so high.
PICKENS: We're not exporting. We're exporting product. They are coming into our refineries and it's coming out of their high price getting into that arbitrage and shipping it out of the United States. We're not exporting oil. We're exporting product.
ROMANS: It's interesting. Natural gas prices have been going down and down and how to use natural gas in this country. I was talking about how they use that in long haul trucks and how to use that but in North Carolina you have oil fields switching from natural gas to oil.
They're not switching. They're moving away from drilling dry gas wells and drilling oil wells not just in North Dakota. It's all over the country. Fred Smith knows more about energy than I do.
BROWNSTEIN: Would more domestic production have a material effect on the price Americans pay at the pump?
PICKENS: Will more?
BROWNSTEIN: Would more U.S. production domestic production of oil significantly affect the prices Americans pay at the pump?
PICKENS: Sure it would. Yes. You see we're 10 percent under the rest of the world today on oil prices. It's $120 a barrel. We're $105.
BROWNSTEIN: Isn't the paradox that higher prices make it more attractive to drill for some of the tougher oil which is what is increasing our domestic production?
ROMANS: You look at the northeast, some of the refineries are trying to refine this messy oil, and it costs more to refine that stuff.
PICKENS: No, that isn't right. The northeast refineries are in horrible shape because they have to compete with the Gulf Coast refineries. Gulf Coast refineries are processing light sweet crude coming off of production out of the basin and out of Texas, out of west Texas.
ROMANS: It's easy to refine stuff.
PICKENS: Yes, it is. Here you have the eastern refineries. They're processing heavier crude and it costs more. So they are taking in foreign price crude and it's about - that's why those refineries are for sale.
ROMANS: I want to switch gears quickly. We want to get to this. Big talking point for the president is about fairness and rich people paying their fair share. I'm happy to inform you that you are rich.
PICKENS: Well, I feel very uncomfortable because they keep saying that. I'm 84 years old next month. And after I was 70, I paid $665 million in taxes.
ROMANS: You paid $665 million in taxes over 13 years?
PICKENS: Yes. I feel I've been - in the last two years I haven't made any money.
ROMANS: What's your tax rate, your effective tax rate? Do you know off the top of your head?
PICKENS: I have losses from '08 and '09 and didn't pay taxes last year. I don't get a salary. So if I sold something and I would get –
ROMANS: So you don't agree with this Buffett rule that we can start on the road to fixing America's financial problems by making rich people pay a greater share of wealth in taxes?
PICKENS: Redo the tax code. That's what we need to do. Quit picking around the edge of it. Go ahead and redo the tax code. Do a value added tax and go from there. We'll get more taxes out of it. And now we pieced it together where you have special interests get special deals. And I don't like to say all of the subsidies that the oil industry gets, come on. The oil industry plays the same thing as GE and other manufacturing companies.
CAIN: This is something I advocated for. Reform the tax code. Simplify it make it easy to understand and do away with credit and exemptions. But whether or not we're talking about oil, we could talk green energy subsidies, would you be OK with that if plays in that industry say do away with my credits and subsidies and we'll be fine? One of the beneficiaries of the complex tax code has been various aspects of the energy industry. I'm saying you're in the energy industry and you advocate for a simplified tax code, and you're fine with that?
PICKENS: Sure. I'm fine with that, yes. Don't have the idea that you're going to replace foreign oil or any other oil with wind or solar. They do not move an 18 wheeler. The only thing you're going to move an 18 wheeler with is diesel or natural gas. That's it. We're oversupplied with natural gas. It's $2. Beijing is $16. The Mideast is $15. Europe is $13. And this summer you will see $20 natural gas in Japan.