WASHINGTON (Reuters) - World crude oil production has topped out at 85 million barrels per day even as demand keeps climbing, helping to drive a stunning surge in prices, billionaire oil investor T. Boone Pickens said on Tuesday.
“I do believe you have peaked out at 85 million barrels a day globally,” Pickens, who heads BP Capital hedge fund with more than $4 billion under management, said during testimony to the Senate Energy and Natural Resources Committee.
The United States alone has been using “21 million barrels of the 85 million and producing about 7 of the 21, so if I could take just a minute on this point, the demand is about 86.4 million barrels a day, and when the demand is greater than the supply, the price has to go up until it kills demand,” Pickens told lawmakers.
U.S. crude futures have risen by a third since the start of the year and more than six-fold since 2002 as surging demand from China and other developing nations outpaces new production.
Oil slipped on Tuesday, a day after touching a record high near $140 a barrel, but remained above $133 a barrel.
Pickens, who announced a $2 billion investment in wind energy earlier this year, told lawmakers during a hearing on renewable electricity that he expected “the price of oil will go up further.” Without alternatives, the cost of foreign oil will drain the United States of more resources, he said.
“In 10 years, we will have exported close to $10 trillion out of the country if we continue on the same basis we’re going now. It is the greatest transfer of wealth in the history of mankind,” he said.
Pickens downplayed the role that speculative trading and institutional investors — forces some see behind the high oil prices — have had in the price trend.
Asked about the role of institutional investors, Pickens told reporters he does not “agree that that has anything to do with oil prices ... It’s a global market. It doesn’t have anything to do with traders on Wall Street or any place else.”
He said increased oversight of oil markets by the U.S. Commodity Futures Trading Commission (CFTC) represents “a waste of time.”
On Monday, the chairman of the Senate Energy Committee, Jeff Bingaman of New Mexico, released new CFTC information he said made the case for greater federal regulation in crude oil markets.
Bingaman and others have introduced a spate of proposals to boost CFTC authority over trading of certain oil contracts.
Reporting by Jasmin Melvin and Missy Ryan; Editing by David Gregorio