T. Boone Pickens started Mesa Petroleum Company in 1956 with a $2,500 investment and built it into the largest independent oil and gas company in America. Then, during the 1980’s, Mr. Pickens became well-known in business circles (Fortune magazine called him the “most hated man in America”) for leading a series of hostile takeover attempts that earned him a reputation as a corporate raider and greenmailer. Although Mr. Pickens’ ideas about corporate restructuring and the tactics he used for achieving them were controversial in those days, many of those ideas are common practice in the business world today, even among hedge funds.
This article reports on recent remarks of the 77 year old Mr. Pickens in which he provides an interesting overview of current oil demand and production statistics:

Let me tell you some facts the way I see it. Global oil (production) is 84 million barrels (a day). I don’t believe you can get it any more than 84 million barrels. I don’t care what (Saudi Crown Prince) Abdullah, (Russian Premier Vladimir) Putin or anybody else says about oil reserves or production. I think they are on decline in the biggest oil fields in the world today and I know what’s it like once you turn the corner and start declining, it’s a tread mill that you just can’t keep up with.
So, when you start adding the reserves in these countries, you’re not even replacing what you’re taking out.
Let me take you to another situation quickly. 84 million barrels a day times 365 days is 30 billion barrels of oil a year that we’re depleting. All of the world’s (oil) industry doesn’t even come close to replacing 30 billion barrels of oil. We don’t spend enough money to even give ourselves a chance to replace 30 billion barrels. It may be because the prospects are not there. I rather imagine that’s what the answer is to that.
So, if you accept that 84 million barrels a day is all the world can (produce), and then look at refining capacity, I think it’s just a coincidence that refining capacity… world capacity… is 84 million barrels a day. So, we’re in balance: 84, 84.
Now you see the projections for the fourth quarter of ’05, I mean like tomorrow; it is 86 to 87 million barrels of oil a day required. China (and) India (are) growing fast. Our economy is going down a little bit, but it doesn’t seem to be shutting off demand for gasoline, oil, natural gas, whatever. But around the world… just assume that the (U.S.) economy is slowing, but China is still ramped up; it is still 86, 87 million for the fourth quarter.
Now we’ve got some pretty good inventory, those will be… I think.. they’ll be gone in the third quarter. I can’t wait to see how this is all going to play out.

After his remarks, Mr. Pickens was asked if he agrees with Houston-based investment banker Matt Simmons that Saudi Arabia’s oil fields may be on the verge of decline. Mr. Pickens replied that he agreed with Mr. Simmons.
As the article on Mr. Pickens’ remarks notes, if he and Mr. Simmons are correct that Saudi promises to raise production over the next decade cannot be fulfilled, then Saudi Arabia’s role as a swing producer and oil price stabilizer will be a thing of the past. That would probably lead to more volatility in energy prices as the world economy begins to adjust to more expensive fossil fuels. Thus, the coming year could be a very interesting one in the oil and gas business.