Pickens Says Saudis Made the U.S. the Swing Producer of Oil; Chinese Supertankers Hold Millions of Barrels of Oil at Sea
QUEST: In an aircraft hangar just outside Dallas, the former governor of Texas, Rick Perry, announced that he's running for the presidency of the United States. Governor Perry boasted that, in his words, on day one of his presidency he'd allow U.S. oil drillers to export their crude into the global market. The industry titan, T. Boone Pickens, says he's not supporting Governor Perry for president. He's going for Jeb Bush. But he agrees with Perry on this point. Life's been very difficult for the U.S. energy industry ever since the price of oil started falling in the middle of last year. I sat down with Mr. Pickens earlier and started our conversation. I asked him if he thinks Middle East producers are attempting to push the American frackers out of business.</s>PICKENS: I don't think they were trying to push us out of business. I think they were trying to get us to slow down. No question they didn't like the things that were happening in the oil industry because they've been stable. They had been able to control by adjusting up or down. And they just said not this time. You do it. They switched the swing producer from the Saudis to us, the United States. And the reason they did that is because our production went up a million barrels a day per year for five years. We went from 4 million barrels to 9.4 million. We're the ones, the United States are the ones that oversupplied the market. We can't do it like the Saudis can. I mean, the king says shut it -- slow it down or increase or whatever. The United States is a free market and we -- nobody says shut down in the United States. So what shuts it down? Very simply are the economics.</s>QUEST: And that's the biggest difference between the U.S. being the swing producer and the Saudis being the swing producer. One does it by political fiat; the other does it by economics.</s>PICKENS: That's exactly right. That's exactly what you have. Now, is it wrong? Is it right? It's what it is. I mean, that's the only real asset the Saudis have.</s>QUEST: I've been in North Dakota for the last couple of weeks.</s>PICKENS: What did you see there?</s>QUEST: I saw an industry that has reformed, restructured and become more efficient at lower prices. And I'm assuming it's the same in Texas. Is it better for an industry to be stable and steady than --</s>PICKENS: You would like to be stable. I mean, any industry would. Like we say, everybody making money, you know, good jobs, everything, that's a perfect industry. And but we oversupplied it and then we saw the price fall and that hurts.</s>QUEST: OPEC is meeting tomorrow. OPEC meets tomorrow and will decide -- there will be no change in production.</s>PICKENS: I don't think so. If I -- if you said you have to -- that you have to take either -- produce more or less, you can't say it'll be flat. I say it'll be flat. But now you've forced me to say if they do anything up or down, they'll go down, not up.</s>QUEST: You still enjoy oil?</s>PICKENS: Sure, I do. That's all I know is oil and gas. I mean, I'm kind of a lightweight on everything else. I worked for a major oil company 3.5 years. Then I left and I drilled my first well six months later. That was in 1955.</s>QUEST: And you've never looked back.</s>PICKENS: No. You know what Satchel Paige said, "Don't look back, they may be gaining on you."</s>QUEST: A motto and model by which we can all live our lives. All this week, we've been taking you to the battlegrounds of this oil showdown. On the eve of the OPEC meeting in Vienna, the signs are that the policy won't change. And as we've shown you that has major implications across the globe. We've been to North Dakota, to Williston, North Dakota, where the boom may be over, the frackers are adapting but the industry is still growing. We've also taken you to Fujairah (ph) in the UAE, where producers keep pumping oil to drive down the prices -- or at least not at least to raise them by cutting production. And now as we move the map on, we take you to Malaysia, off the Malaysian coast, where China is paying to store crude in giant oil tankers, waiting for the price to rise and protecting themselves against any dislocation. CNN's Andrew Stevens reports.</s>ANDREW STEVENS, CNN CORRESPONDENT (voice-over): The price of oil may have recovered a little bit in the last few weeks but nowhere near enough to stop the pain for the big producers like Saudi Arabia or for the fracking industry in the U.S. But there is one clear country whether here: China. And China is buying big . It doesn't get any bigger than this. This is the world biggest supertanker, the TI Europe, now at anchor in the Strait of Malacca, brimming with millions of barrels of oil destined for China. Beneath these gleaming white decks about 1.5 meters or so under my feet is 3 million barrels of oil spread across 21 tanks. The latest shipment arrived just three weeks ago, 950,000 barrels of Algerian oil. But the oil is coming from just about everywhere, especially from China's biggest supplier, Saudi Arabia, which see Beijing as a key client after using some of the U.S. market to frackers. China has now overtaken the U.S. to become the world's biggest oil importer, a first for the world's second biggest economy. Demand is so high there's not enough space to store it in the country. So the TI Europe and other vessels nearby are being turned into floating storage tanks placed between the Gulf of Africa and China. This insatiable demand, say analysts, is being led by a strategic imperative, to build up the country's oil reserves.</s>RICHARD MATTHEWS, RESEARCH ANALYST: Most developed country have around 90 days' stock. So if they couldn't import any more crude oil, they have 90 days' worth of supply to keep themselves going. China doesn't have anywhere near that level at the moment. So it's developing its own reserves.</s>STEVENS (voice-over): Coming up strategic reserves are critical for this energy hungry nation but it's not the only driver of China's oil demand. Even as GDP slows to 7.5 percent or even less, the new normal, as it's now called, it's still consuming a steady 10 million barrels a day helped in part by a new love affair with gas-guzzling SUVs, lower gas prices has seen sales across the country soar by a whopping 48 percent in the first three months of this year. And the good news for these drivers and for the Chinese government, some analysts say there's little sign of oil prices going anywhere but back down.</s>JEFF BROWN, PRESIDENT, FACTS GLOBAL ENERGY: We actually think the market's way oversupplied right now. We think it could drop below 50. It's obviously been going in the other direction. But when we look at the length of the market and how much oil is just out there and is going -- and the inventories are going to continue to build, it just doesn't look sustainable to us.</s>STEVENS (voice-over): And that makes ships like these at a cost of $40,000 a day an attractive option. For a cashed out China a rare chance to stock up cheaply on the very lifeblood of its economic might -- Andrew Stevens, CNN, Malacca, Malaysia.</s>QUEST: Now that's what you call a big ship. In a moment, technology that watches you and watches what you watch. The life-changing potential of the eye tracker as we have "Make, Create, Innovate" next.