The David Rubenstein Show: Mike Wirth

Summary

In this interview, Chevron CEO Mike Worth discusses the oil industry's cyclical nature, the impact of war in Ukraine on energy markets, and Chevron's strategy to transition to renewable energy. He addresses the misconception of energy companies being price-makers, the importance of a balanced approach to energy focusing on affordability, reliability, and environmental protection, and shares his vision for Chevron's future in a sustainable energy landscape.

Takeaways

• 📈 The energy industry, particularly oil companies, has been experiencing record profits and revenues, which has led to discussions about implementing a windfall profits tax.
• 💼 Mike Worth, CEO of Chevron, emphasizes that the industry is cyclical and a windfall profits tax could deter investment, potentially leading to less energy production and higher prices.
• 🌐 Chevron, under Worth's leadership, is focused on operating in a way that is mindful of the environment while also meeting the energy demands of a growing global population.
• 🔍 Worth discusses the importance of engaging with regulators and legislators to educate them on the economic realities and potential consequences of their decisions on the energy sector.
• 🚫 Chevron, like other energy companies, is often criticized for price gouging, but Worth counters this by stating that they are price takers in a global market and that the industry's returns on capital are modest.
• ⛽ The war in Ukraine has had a significant impact on energy markets, causing oil prices to rise. Worth suggests that once the conflict ends, market uncertainties and risks to supply will decrease, which could lead to lower energy prices.
• 🌿 Chevron is investing in renewable energy and lower carbon technologies as part of its strategy to transition towards a more sustainable energy future.
• 🌟 Worth highlights Chevron's acquisition of Renewable Energy Group, a leading producer of biodiesel and renewable diesel, as a strategic move to strengthen its renewable energy business.
• 🛑 The safety of offshore drilling has improved significantly, with Chevron and the industry as a whole working hard to prevent environmental disasters like past oil spills.
• 🏆 If Worth were to retire, he would hope to be remembered for strengthening Chevron's culture, prioritizing safety, and leaving the company in a better state than when he joined.

Q & A

What is the current state of the oil industry according to the interview?

The oil industry is experiencing cyclical nature with record profits and revenues, which has led to suggestions of a windfall profits tax. However, the industry is also dealing with the impact of the war in Ukraine and the transition towards renewable energy.

Why did Chevron's CEO, Mike Worth, oppose the idea of a windfall profits tax?

Mike Worth believes that a windfall profits tax would not encourage more supply and could potentially increase prices, as it did when President Carter tried to implement it in 1980. It resulted in less investment and production.

How does Chevron's CEO view his role when interacting with Washington regulators and legislators?

Mike Worth sees his role as providing objective input to help regulators understand the potential consequences of their decisions, aiming to avoid unintended outcomes and assist in achieving their goals.

What is Chevron's stance on being labeled as 'gouging' by the U.S. President?

Mike Worth disagrees with the characterization of energy companies as 'gouging'. He explains that the industry is one of price takers, not price makers, and that global commodity markets dictate prices.

How has the war in Ukraine affected Chevron and the energy market?

The war has impacted energy markets by creating uncertainty and risk to supply, which has tightened the market. However, the industry was already facing challenges due to reduced investment levels during the pandemic and subsequent demand recovery.

What is Chevron's strategy for the future in terms of energy production?

Chevron is focused on leveraging its strengths to deliver lower carbon energy. This includes reducing emissions from current oil and gas operations and investing in inherently lower carbon energy businesses like renewable fuels, hydrogen, carbon capture, and storage, and geothermal.

Why did Chevron acquire Renewable Energy Group, and what does it mean for the company's renewable strategy?

Chevron acquired Renewable Energy Group to strengthen its renewable fuels business by combining their expertise in feedstock sourcing and manufacturing with Chevron's market positions and brand strength, especially in states that encourage renewable energy.

What is Chevron's position on the safety of offshore drilling and how has it improved over time?

Chevron considers safety and environmental protection as top priorities. Offshore drilling safety has significantly improved due to better operating practices, equipment, and strict adherence to high regulatory standards.

How does Chevron's CEO perceive the public's view of energy companies, and what can be done to improve this image?

Mike Worth acknowledges the challenge of being a large energy company and suggests engaging in a balanced conversation about the benefits of energy and the industry's efforts to reduce carbon impact while meeting the world's energy needs.

What are Mike Worth's personal ambitions and how does he view his legacy as Chevron's CEO?

Mike Worth is committed to Chevron and the energy industry, with no ambitions outside of his current role. He hopes his legacy will be one of strengthening the company's culture, ensuring safety, and leaving the company in a better state than when he joined.