F. Scott Fitzgerald got it wrong when he said "there are no second acts in American lives." Boone Pickensproves that.
Most know Pickens as a rich oilman and former corporate raider. That's only half right. Having interviewed Boone many times, I have gotten to know the man behind the money and the now-ubiquitous "Pickens Plan" ads for his wind/natural gas program. There is much more than the folksy charm and billion dollar hedge fund.
Boone was one of the best-known -- some would say infamous -- corporate raiders of the 1970s and '80s. Now, he is known for his energy ideas and incredibly profitable hedge fund, BP Capital.
What most people don't know is the story behind that. When he lost control of Mesa Petroleum, Pickens hit a low point. He divorced and gave half his dwindling fortune to his ex-wife. He became depressed. But he bounced back and decided to try something new -- a hedge fund. He began the fund with $36 million of his own money and a few small investors. His natural gas bets at first went horribly wrong and his $36 million fell within a few months to just over $3 million.
He then did what he has done many times: bet big. He laid down all he had on a few select nat gas trades and let it ride. Boom or bust. The Pickens way.
His call was right, and that $3 million surged to over $100 million in less than a year. From there it was no looking back, and now BP Capital is one of the most successful hedge funds in America. Just ask some of his initial investors who turned small bets into huge fortunes.
He is now betting billions on his "Pickens Plan" for wind energy and natural gas. The critics say his environmental stance is nothing more than capitalism and an attempt to profit. After all, Pickens also controls natural gas company Clean Energy (CLNE), which profits from increased use of nat gas for transportation.
Pickens' answer: of course it's about profit. Without an economic incentive, few big projects would ever get done. Financial life is about risk/reward, and Pickens is laying huge amounts of his own money into the project.
Whatever you think about the plan or the man, there is no doubt that Pickens has done something to admire: created a second act for himself. He rose from despression and near financial ruin to get back on top. He writes about it in his new book, "The First Billion is the Hardest."
I'll be interviewing Pickens later today from the NYMEX about his book, oil and second chances. Catch it here on Fox Business.
Mr Sullivan,
Great blog as always. Boone Pickens is a billionaire for many reasons, but I think the biggest reason is that he has both guts and vision. Most people would have given up after such a financial bust, but he dug in and fought his way back to the top. The energy industry is changing fast, we have seen what a monster spike in crude prices can do to the world markets and more importantly to the market's "psyche". We have reached the tipping point now as far as "green" fuel options go, and the race is on to see who the new "oil barons" will be. For any of these options to work and be brought to market, there will have to be a profitable model introduced into our system. These things will not happen by magic, nor will they be "provided" by a benevolent government. They will be developed and delivered by people like Mr. Pickens, in a profitable way, and if they work and stay profitable we all will benefit. Not only will we benefit from the cleaner aspects of these alternative fuels, but we will benefit hugely from eliminating oil as an income stream into our enemies coffers.
Hydrogen is the long term solution, just a few weeks ago Dr. Daniel Nocera from MIT published a startlingly simple way to use solar generated electrical current to divide water molecules into Hydrogen and Oxygen gasses. This basic mechanism of photosynthesis has beem viable for years but at the expense of highly alkaline byproducts and at an enormous cost. The MIT professor has found a much cheaper way to do this, without the corrosive byproducts, using cheap and plentiful catalysts. With some photovoltaic cells (solar panels) you will be able to make Hydrogen at home while the sun shines, and store it for use in your fuel cell as needed. The byproduct is more water and Oxygen gas. This will eliminate the distribution issues surrounding Hydrogen, and in effect we will all benefit from the sun's virtually unending flow of energy. So until the Hydrogen fuel cell is perfected and distributed we all will be in need of what Mr. Pickens is investing in. I for one hope he hits another home run on this one, his gain will be our gain as well.
September 3, 2008 at 3:30 pm
monkeyfurball
I suspect that not natural gas cars, but electric cars will be the thing of the future. Better lithium batteries, plug the car in at home and get 100 miles on a charge then supplant that with a tiny gas engine in the car. Natural gas will still be in huge demand to power the utility plant providing the massive increase in electricity needed. So Boone may not make much on CLNE but his wind turbines should haul in the money eventually.
September 3, 2008 at 2:28 pm
monkeyfurball
Pickens has a better life story than Buffet. This guy made a billion in a very short time from only $3 million. That is astonishing. Kudo's to him.
September 3, 2008 at 2:25 pm
Tim Wells
The plan will be disastrous to us. If you start burning natural gas in cars, the price will go through the roof. Keep in mind they are controlled by Utility Companies. I would hate to see some old woman in her home frozen to death because she can't afford heat.
Pickens Plan is just a slick willy attempt, but a highly profitable for Pickens.
What we need is ELECTRIC cars. Every train on the tracks has been running with electric motors for YEARS! They have diesel generators that power motors at each wheel. They are super efficient and haul tons and tons of freight for half the cost.
They have lift trucks that are electric and do very well every single day. Enough with the hogwash stuff.
September 3, 2008 at 2:08 pm
Dana Swan
Now for some technical issues;
Line loss of electricity over long distances (line loss) using wires will limit the wind power energy to fairly short distances between the wind generators and the point of use.
Electric cars are terribly energy wasteful (50%) if we use fossil fuels to make the electricity. There are several energy conversions and line loss, each with energy waste. The only way electric cars make sense is with nuke power.
If we use nuke power generation (France has 134 nukes) we can use hydrogen made by the nukes to phase in hydrogen powered vehicles and phase out gas/diesel burners.
There is a billion years of (cheap) nuke fuel. If we use nuke power generation, the revenues can be used to solve the probem of the spent fuel. The lateset technology is a way to use up to 90% of the fuel, leaving a much smaller waste proble. Note, the new G.E. nukes are extreemly safe, unlike the early nukes.
September 3, 2008 at 11:25 am
Dave
Pickens Plan is to remove Natural Gas from electricity production altogether to enable it's use as a transportation fuel. Currently 20% of our electricity comes from Natural Gas and he wants to replace that with wind. The good part of the plan is whether you use wind or something else such as nuclear to replace the Natural Gas, technologies are available to do this quickly. Also many vehicles on the road can run on CNG (Compressed Natural Gas) with relatively inexpensive modifications. If the government subsidized the vehicle conversions this could again happen quickly and make a big dent in the use of foreign oil. In short the plan would work. The better plan though would be to skip the CNG part and get electric cars like the Chevvy volt or the Miles Electric on the road, and subsidize them, either by lowering the purchase price or providing very cheap leases, to get them on the street quickly. If every family in America had such a vehicle our dependency on foreign oil would be over as quickly as the cars could be produced. If anyone is in any doubt this is a national security issue, the situations in Iran and Georgia surely prove the case.
September 3, 2008 at 7:32 am
Katie Book
T. Boone Pickens.....
A prime example of "it takes money to make money". Let him profit as long as his plan allows us "poor" folks to save some money. He obviously has the Midas Touch!
September 2, 2008 at 4:30 pm
robstoddard
Picken's plan promises that 20% of our energy can come from wind. The problem I see here is that other 80% he asks for. He wants it to come from natural gas, which is interesting because he's so heavily invested in natural gas. The wind plan is a red herring to those who want to see what's really going on. Let me give you the ol' Rob Stoddard plan. It's so simple, and involves technologies we've already got. The word is "nuclear." This will provide all of the electricity we need. France uses nuclear energy for over 80% of their power, why isn't America?
Sure there'll be a fair amount of debate about how clean it is, but France has proven that all radioactive nuclear waste can be reprocessed and turned back into fuel... Perhaps we should learn some lessons from the world's leading nuclear power.
September 2, 2008 at 12:35 pm
aboutthis blog
Brian Sullivan joined FOX Business Network (FBN) in April 2008 as an anchor. He co-anchors the 10am-12pm ET hours of the FOX Business block.
Prior to joining FBN, Sullivan served as an anchor for Bloomberg Television where he hosted the programs Morning Call and In Focus.
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Chiefos McStacy
Mr Sullivan, Great blog as always. Boone Pickens is a billionaire for many reasons, but I think the biggest reason is that he has both guts and vision. Most people would have given up after such a financial bust, but he dug in and fought his way back to the top. The energy industry is changing fast, we have seen what a monster spike in crude prices can do to the world markets and more importantly to the market's "psyche". We have reached the tipping point now as far as "green" fuel options go, and the race is on to see who the new "oil barons" will be. For any of these options to work and be brought to market, there will have to be a profitable model introduced into our system. These things will not happen by magic, nor will they be "provided" by a benevolent government. They will be developed and delivered by people like Mr. Pickens, in a profitable way, and if they work and stay profitable we all will benefit. Not only will we benefit from the cleaner aspects of these alternative fuels, but we will benefit hugely from eliminating oil as an income stream into our enemies coffers. Hydrogen is the long term solution, just a few weeks ago Dr. Daniel Nocera from MIT published a startlingly simple way to use solar generated electrical current to divide water molecules into Hydrogen and Oxygen gasses. This basic mechanism of photosynthesis has beem viable for years but at the expense of highly alkaline byproducts and at an enormous cost. The MIT professor has found a much cheaper way to do this, without the corrosive byproducts, using cheap and plentiful catalysts. With some photovoltaic cells (solar panels) you will be able to make Hydrogen at home while the sun shines, and store it for use in your fuel cell as needed. The byproduct is more water and Oxygen gas. This will eliminate the distribution issues surrounding Hydrogen, and in effect we will all benefit from the sun's virtually unending flow of energy. So until the Hydrogen fuel cell is perfected and distributed we all will be in need of what Mr. Pickens is investing in. I for one hope he hits another home run on this one, his gain will be our gain as well.
monkeyfurball
I suspect that not natural gas cars, but electric cars will be the thing of the future. Better lithium batteries, plug the car in at home and get 100 miles on a charge then supplant that with a tiny gas engine in the car. Natural gas will still be in huge demand to power the utility plant providing the massive increase in electricity needed. So Boone may not make much on CLNE but his wind turbines should haul in the money eventually.
monkeyfurball
Pickens has a better life story than Buffet. This guy made a billion in a very short time from only $3 million. That is astonishing. Kudo's to him.
Tim Wells
The plan will be disastrous to us. If you start burning natural gas in cars, the price will go through the roof. Keep in mind they are controlled by Utility Companies. I would hate to see some old woman in her home frozen to death because she can't afford heat. Pickens Plan is just a slick willy attempt, but a highly profitable for Pickens. What we need is ELECTRIC cars. Every train on the tracks has been running with electric motors for YEARS! They have diesel generators that power motors at each wheel. They are super efficient and haul tons and tons of freight for half the cost. They have lift trucks that are electric and do very well every single day. Enough with the hogwash stuff.
Dana Swan
Now for some technical issues; Line loss of electricity over long distances (line loss) using wires will limit the wind power energy to fairly short distances between the wind generators and the point of use. Electric cars are terribly energy wasteful (50%) if we use fossil fuels to make the electricity. There are several energy conversions and line loss, each with energy waste. The only way electric cars make sense is with nuke power. If we use nuke power generation (France has 134 nukes) we can use hydrogen made by the nukes to phase in hydrogen powered vehicles and phase out gas/diesel burners. There is a billion years of (cheap) nuke fuel. If we use nuke power generation, the revenues can be used to solve the probem of the spent fuel. The lateset technology is a way to use up to 90% of the fuel, leaving a much smaller waste proble. Note, the new G.E. nukes are extreemly safe, unlike the early nukes.
Dave
Pickens Plan is to remove Natural Gas from electricity production altogether to enable it's use as a transportation fuel. Currently 20% of our electricity comes from Natural Gas and he wants to replace that with wind. The good part of the plan is whether you use wind or something else such as nuclear to replace the Natural Gas, technologies are available to do this quickly. Also many vehicles on the road can run on CNG (Compressed Natural Gas) with relatively inexpensive modifications. If the government subsidized the vehicle conversions this could again happen quickly and make a big dent in the use of foreign oil. In short the plan would work. The better plan though would be to skip the CNG part and get electric cars like the Chevvy volt or the Miles Electric on the road, and subsidize them, either by lowering the purchase price or providing very cheap leases, to get them on the street quickly. If every family in America had such a vehicle our dependency on foreign oil would be over as quickly as the cars could be produced. If anyone is in any doubt this is a national security issue, the situations in Iran and Georgia surely prove the case.
Katie Book
T. Boone Pickens..... A prime example of "it takes money to make money". Let him profit as long as his plan allows us "poor" folks to save some money. He obviously has the Midas Touch!
robstoddard
Picken's plan promises that 20% of our energy can come from wind. The problem I see here is that other 80% he asks for. He wants it to come from natural gas, which is interesting because he's so heavily invested in natural gas. The wind plan is a red herring to those who want to see what's really going on. Let me give you the ol' Rob Stoddard plan. It's so simple, and involves technologies we've already got. The word is "nuclear." This will provide all of the electricity we need. France uses nuclear energy for over 80% of their power, why isn't America? Sure there'll be a fair amount of debate about how clean it is, but France has proven that all radioactive nuclear waste can be reprocessed and turned back into fuel... Perhaps we should learn some lessons from the world's leading nuclear power.