It's no secret that America is at an energy crossroads. Energy prices are only expected to increase, and relying on foreign oil could pose a national security threat. Renewable energy seems like a possible alternative, especially with government incentives -- yet capital markets aren't permitting it right now.

To gain some perspective on the multitude of issues that plague the energy space, I spoke with T. Boone Pickens, oil tycoon, champion of the Pickens Plan, and chairman of hedge fund BP Capital.

Pickens says he's moving forward with the Pickens Plan, despite having to postpone his wind farm project because of clamped capital markets and difficulties surrounding transmission of energy generation. Aside from the plan, the billionaire says the Commodities Futures Trading Commission's (CFTC) potential regulation to limit trading in the oil futures markets doesn't faze him. Pickens says he thinks oil is going to $75 a barrel by year-end -- and higher in the longer term.

We also discussed Pickens' favorite energy companies to invest in. After crashing in 2008, Pickens -- who has a 20% stake in his hedge fund -- has seen his fund's energy futures fund rise 79% this year, while his energy equity fund is up 14%.

What follows is an edited transcript:

Jennifer Schonberger: What is your outlook for renewable energy as a whole, and do you still believe in wind energy as the future energy source for America?

T. Boone Pickens: Yes. You're going to start to use our resources in this country and quit depending on somebody else's oil. Now, wind and solar are not going to replace crude oil, because oil is used primarily for diesel and gas transportation fuel. So we need to get on our own resources, and I think that is starting to happen. I think this administration is committed to it, and they're going to see that it does happen.

Schonberger: What about the fact that the recession has caused energy prices to fall, which in turn has made expensive renewable sources such as wind and solar non-competitive in terms of cost -- an important consideration at a time when consumers are trying to save on energy bills. How does that bode for the future of renewables?

Pickens: On the renewables, no question, demand often makes a difference, but that's just a temporary situation. By the time they get the legislation passed, I'm confident that the price of fuel will be back up again. ... I think that the renewables are going to be used, and once we get started, we'll find out that we can do it cheaper than when we start out.

Schonberger: Senate Majority Leader Harry Reid introduced the Natural Gas Act into the Senate (incentives for natural-gas-fueled cars). Do you think the bill will pass?

Pickens: Look at what happened two weeks ago on H.R. 1622. It was a nonpartisan natural gas bill that offers $30 million in funding per year for research on natural gas vehicles. It went right through. Now, no question it was a small bill, but it gives you a pretty good indication of how our Congress is looking at anything related to natural gas. Yes, I think that 1835, the Natural Gas Act, will pass. When you look at the co-sponsors on the bill, they have 100 co-sponsors and they're split 50-50 Democrats and Republicans. The companion bill in the Senate is 1408, and those two bills are very compatible and will help [the legislation] come together real fast. So yes, I think the Natural Gas Act is going to pass in October.

Schonberger: With regard to natural-gas-fueled cars, how long will it take to set up the infrastructure and what is the cost to replace the gasoline fueled internal combustion engine?

Pickens: I see it as a seamless event. The way it works is you cut out diesel for the purchase of new 18-wheelers. Set it up where you use domestic fuel on the 18-wheelers and cut out the diesel. That's good for the environmentalists because natural gas, for instance, is 50% cleaner than diesel. It's cheaper, it's ours, and it's abundant. So start with the 18-wheelers and the infrastructure will come as fast as the vehicles show up. The government doesn't have to set up the infrastructure. That can be done by private industry. ...

Don't worry about costly. Private industry will expect to make a profit off it and if they do, they'll pay taxes, which will help the economy by creating jobs. 350,000 18-wheelers will get you 420,000 jobs. The only place [government would] need to help is to incentivize the 18-wheeler owner because you have an incremental difference in the cost of a natural gas truck and a diesel truck, but you can make up for it on the cost of fuel.

Schonberger: The CFTC has suggested speculators have been a strong force in driving volatile swings in oil prices. As a result, the agency is widely expected to adopt new rules that would limit the amount of investments in commodities by big institutions that are only in it for financial gains as opposed to taking delivery of the commodity. As someone whose energy futures fund is up 79% this year, where do you stand on this issue?

Pickens: They can do whatever they want to. Whatever rules they set up, we'll play under those rules. Throw the ball up in the air, tell me what kind of game it is, and we'll play that game.

Schonberger: Should this regulation pass, what are the implications for the stocks of energy companies that have profited from such a surge in oil prices (driven by speculators or not)? Would the passage compromise profits for these companies?

Pickens: I don't believe speculation drives up the physical market. So too high for the price of oil are the people that have the oil, and so when the Saudis tell me it's going to be $75 oil, I believe them. That's what they're going to have. It doesn't have anything to do with the Nymex.

Schonberger: Where do you see the price of crude oil going by the end of the year? What about 2010 and long-term?

Pickens: I see oil at $75 by the end of the year, and in 2010 and longer term, it will be higher.

Schonberger: Oil is obviously a commodity. To that end, do you think we are in a secular commodities bull market?

Pickens: Well, in oil you're dealing with a supply of 85 million barrels a day globally, and that's all you're going to get. Jump out to December 2010 on the commodity market, and it shows $75/$77 [a barrel] right now. For December 2011 it's $80. I would imagine that market, that distance out there looking at the commodity I think that's probably fairly accurate.

Schonberger: In terms of hot spots you and your funds are investing in within the energy space, what areas do you favor most right now? E&P, oil services/natural gas, refiners?

Pickens: We're in the E&P companies. I've said before that I think the two best on oil are Suncor Energy (NYSE:SU) and Continental Resources (NYSE:CLR). Devon Energy (NYSE:DVN), Chesapeake Energy (NYSE:CHK), SandRidge Energy (NYSE:SD), and Range Resources (NYSE:RRC), are also well-run companies, and they'll do well when natural gas recovers. We [also] like their reserve bases.

Schonberger: Does your hedge fund have plans to roll out a renewable energy fund?

Pickens: No.

Schonberger: Could you update me on the status of your plan?

Pickens: We're not going to have transmission available to us until 2013. We start to receive turbines in the first quarter of 2011, so we're going to have to find another place to use them then where we thought we were going to, so it's not anything more than you experience in other deals. You have to make adjustments from time to time. We'll make an adjustment, use the turbines in 2011 someplace else and use turbines in 2013 back on the Pampa Project ...

So I think the Pickens Plan is right on course. We're further down the track. We haven't lost any of the components that we talked about from the outset in July 2008, everything is still alive and it's moving forward. I think you're going to have legislation from Congress this year that will dictate the direction of energy for the next 50 years for the United States. It will be monumental if it comes off like I think it will.

For Related Foolishness:

Start investing today -- just $7 per trade with Scottrade. Or find the broker that's right for you.

Jennifer Schonberger owns no shares of any of the companies mentioned in this article. Chesapeake Energy is a Motley Fool Inside Value pick, and The Fool owns shares of it. The Motley Fool has a disclosure policy.