Pickens: Water is the New Oil

Tuesday, June 24th, 2008

T. Boone Pickens, the legendary corporate raider and oilman believes that water is the new oil. A recent BusinessWeek article discusses his investment and and his convictions on the water supply opportunity and his company, Mesa Water’s plans. This is an interesting story, microcosmic of the critical issue and opportunity in water that is bubbling up globally.

Here are a couple of excerpts:

Into this environment comes Pickens, who made a good living for a long time extracting oil and gas and now, at 80, believes the era of fossil fuel is over. So far he has spent $100 million and eight years on his project and still has not found any city in Texas willing to buy his water. But like many others, Pickens believes there’s a fortune to be made in slaking the thirst of a rapidly growing population. If he pumps as much as he can, he could sell about $165 million worth of water to Dallas each year. “The idea that water can be sold for private gain is still considered unconscionable by many,” says James M. Olson, one of America’s preeminent attorneys specializing in water- and land-use law. “But the scarcity of water and the extraordinary profits that can be made may overwhelm ordinary public sensibilities.”

“Water is a commodity,” he says. “Heck, isn’t it like oil? You have to come back to who owns the water. The groundwater is owned by the landowner. That’s it.” When it comes to potential buyers, Pickens cares about only one thing: how much they’re willing to pay. “Do I care what Dallas does with the water? Hell no.”

Read the full article: 

There Will Be Water, Susan Berfield, BusinessWeek, June 12, 2008

People who read this post also read these:

• Rob Fraim’s Call on Energy
• Words from the (investment) wise for the week that was (November 24 – 30, 2008)
• The Bonfire of the Vanities, the Sequel
• Remain Heavily Underweight Banks
• Oil Stocks vs. Oil

Tags: 5 Million, Commodity, Excerpts, Markets, Mesa Water, oil, Oil and Gas, pickens, Scarcity, SMI, Water, water supply
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Byron Wien’s Ten Predictions for 2008 and what he predicted for 2007

Thursday, January 3rd, 2008

January 2, 2008 Check out what Pequot Capital’s Byron Wien predicts for 2008 in Wall Street Journal: Here’s a quick summary of his 2008 predictions:

1. The U.S. economy suffers its first recession since 2001.
2. S&P earnings decline year-over-year, and the index falls 10%.
3. The dollar strengthens in the first half to $1.35 against the euro, but weakens in the second half.
4. Inflation rises above 5% on the CPI and 10-year yields hit 5%. Stagflation becomes a prominent topic on the campaign stump and in op-ed pieces.
5. The price of oil goes down early in the year (to $80 a barrel) and up again later, rising to $115 a barrel in the second half of 2008.
6. Agricultural commodities remain strong. Corn rises to $6.00 a bushel and cotton to 85 cents a pound, while gold reaches $1000.
7. The Chinese stock market gets hit sharply as the Chinese economy slows. China revalues the remnimbi by another 10%. (As an aside he expects several long-distance runners to beg off from the Beijing Olympics due to air quality issues.)
8. Russia’s new president, Dmitry Medvedev, becomes more assertive in world affairs, and Russia and Brazil lead the BRIC stock markets, while the Gulf Cooperation Council markets begin to attract interest among emerging market investors.
9. Infrastructure improvement will be an important election theme, bolstering construction and engineering stocks. Water supply becomes a criticial problem world-wide.
10. Barack Obama is elected president in a landslide over Mitt Romney, and the Democrats end up with 60 Senate seats and a clear majority in the House of Representatives.

  Here’s what he predicted for 2007: Pretty Good Calls

1. The S&P 500 exceeds 1600 thanks to strong earnings, and market volatility jumps.
2. China revalues the yuan by 10%.
3. Crude remains in short supply because of Asian demand, pushing oil to $80 a barrel.
4. Agricultural prices rise – corn at $5 a bushel, wheat to $7, soybeans to $9 and cotton to 80 cents a pound.
5. S&P 500 earnings grow by 10% in 2007.
6. The Fed doesn’t lower rates in the spring, and the 10-year yield rises to 5.5%, with the yield curve resuming a positively sloped shape.
7. Gold hits $800 an ounce and silver rises to near $18.
8. Japan’s Nikkei 225 rises 15% as the Japanese economy improves.
9. Latin America does well, particularly Brazil, where the Bovespa index rises to 55,000 (currently 44,780).
10. Rudy Guiliani pulls ahead as the leading candidate for Republicans and Barack Obama “gains momentum” for the Democrats.

He appears to have been dead-on 4, 6, and 9.

People who read this post also read these:

• Words from the (investment) wise for the week that was (November 17 – 23, 2008)
• Words from the (investment) wise for the week that was (November 24 – 30, 2008)
• How Solid are the BRICs? (Part 2)
• Remain Heavily Underweight Banks
• Why the selloff in commodities and emerging markets?

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