Dueling rich men: Pickens, Forbes on oil

It was a typical oddball Milken conference matchup: longtime Texas oilman T. Boone Pickens sparring with magazine editor and former presidential candidate Steve Forbes in a lively debate on oil prices and energy policy.

The result in the packed Beverly Hills ballroom Tuesday? Horror -- and amusement.

Pickens drew a mix of groans and quiet gasps with his prediction that U.S. oil prices would top last year’s record high of $78.40 a barrel by year’s end, and that consumers would feel the pain through sharply higher pump prices.

“We’re going to come to the wall this year,” said Pickens, 79. “You’ll have to kill the demand with price.”

It’s unclear what that price would be. In California, where the average cost of self-serve regular is $3.32 a gallon, consumers seem to be making few concessions. On Tuesday, an L.A. Shell station had plenty of customers buying regular at $3.75 when they could have saved 50 cents a gallon at an Arco a few blocks away.

Forbes was slightly more optimistic. He contended that today’s oil futures prices -- which closed at $64.58 a barrel Tuesday -- were primarily a reflection of supply strains caused by politics and overseas nationalism. More drilling, particularly in Alaska and in U.S. offshore regions, is the ticket to lower oil prices, he said.

“There’s more oil out there. The real question is: Are we going to get the political environment where it can be extracted?” said Forbes, who spent some of his millions on presidential bids in 1996 and 2000. “If you look around the world, we’ve barely scratched the surface.”

Pickens, whose oil industry career stretches back to 1951, wasn’t convinced.

“I don’t think there’s much [oil] left that we don’t know about,” said Pickens, who now runs a hedge fund with $4 billion invested in energy stocks and commodities. With a slight smirk, he told Forbes, “Let me give a little more of my qualifications.... “

While the audience laughed, he added: “You won’t meet anybody in the next year who has drilled as many dry holes as I have.”

Not to be outdone, Forbes joked: “I drill political dry holes.”

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elizabeth.douglass@latimes.com