I was asked under oath in a congressional hearing to pledge that we would never again produce any more energy than we were at that point in time. And some of the other companies that were at that hearing agreed to that. I did not because I said, 'Look, the demand for our products is going up, not down.'
Let's get the big question out of the way first. Do you watch Land Man?
You do? What do you think?
Is it a good depiction of your new home in Texas?
Well, a good show needs to take some liberties with reality and create some drama. There are certain aspects of it that are actually very true. It's about a small company competing in West Texas. A little bit different than the realities at a large company, but a lot of the core activities are pretty accurate.
So, you became CEO in 2018. You think about everything you've been through. You experienced negative oil prices. Who thought that could happen? You had the pandemic. The Russian invasion of Ukraine and all the impact on the energy business. Been through a wild political period where for a while there was a large group of people who thought what you did was inherently evil, and then after that a group of people elected who shouted 'drill baby drill.' It's hard to imagine bigger swings in public opinion. What do you see? What have you been able to do in all that chaos? What's the biggest change that you've implemented as CEO of Chevron?
Well, I've been in this business for a long time, 43 years with one company. I've seen wars, terrorist attacks, high oil prices, low oil prices. You realize that most of these things don't last, so you don't overreact to the volatility. It's a commodity business, inherently volatile, deeply technology dependent, and politically important in every country. The thing I've been reminded of is to steer a steady course through choppy waters. I've tried to stay focused on the fundamentals of demand, technology, competition, policy, and balance those out, not get swung by the issues of the moment. We make investments with very long life cycles, so we need a long-term goal.
What do you see as the biggest change that you've made in the company over the seven years you've been in?
When I came in, we were coming out of a phase where China had driven demand for commodities, and oil prices were over $100, $140 in 2008. There was talk of peak oil. Today it's about peak demand. Our industry was overspending to respond to high prices and perceived shortage. We lost capital discipline. My first priority was to return capital discipline to our company and set an example for the industry.
And you've succeeded at that? You believe?
I think we have, and I think our industry has. There were companies in the shale business not returning cash to shareholders, reinvesting every dollar and borrowing more just to grow. Now the industry is more focused on disciplined capital investment, capital efficiency, returning cash to shareholders, and meeting customer demand more efficiently.
What's been the biggest surprise to you over the last seven years?
The geopolitical surprises are hard to predict. What happened in Israel was a surprise, Ukraine was a surprise, COVID was a big surprise. People talk about black swans, and we've had many. In our industry, the top line can swing rapidly. Strong balance sheet and cost and capital discipline are how you steer through those things.
Let's talk about the politics. At one point you had a member of Congress saying you should stop producing and exploring for more oil. Some European companies made that commitment. What was your reaction?
I was asked under oath in a congressional hearing to pledge that we would never again produce any more energy than we were at that point. Some other companies agreed. I did not because the demand for our products is going up, not down. We need to meet demand. If we don't, prices go higher, which is not good for the economy or consumers. It's back to the fundamentals of supply and demand. If demand is growing, you should work to meet it, not pledge not to.
You have supply and demand, but also externalities. How do you think about the climate challenge?
The climate challenge is real. The world has begun to see that the energy transition can't happen as fast as some believed. I always thought the energy system would evolve as it has for 150 years, adding new forms of supply. The world uses as much biomass today as in the 1850s. Demand for coal, oil, hydro, wind, solar are all higher than ever. We add new supplies to meet the needs of a growing world where most people don't have a lifestyle we recognize.
But there's more to this than meeting demand. What is your responsibility as a company to shift energy production to help the climate?
First, we reduce our own emissions. We've reduced emissions on oil and gas production by over 40% in less than a decade. We've invested in technologies like carbon capture and storage, sequestering millions of tons of CO2 per year. We're starting one of the world's largest green hydrogen facilities in Utah, which will store more energy than two to three times all grid-connected batteries in the US. We start with things where we can create shareholder value and leverage our capabilities, like hydrogen, carbon capture, geothermal, and biofuels. We don't go into wind or solar because we don't bring unique skills. We invest in things that can compete without long-term subsidies.
Which of those is most likely to break through? Hydrogen, carbon capture, geothermal? Where do you put the most hope?
They all struggle on an unsubsidized basis. Biofuels are the most well-established. Hydrogen is difficult, fighting thermodynamics at huge scale. Geothermal offers promise, but it's early. Carbon capture sits in the middle. There's no silver bullet. We need an all-of-the-above energy policy, not exclusionary. We need nuclear, which is the ultimate low-carbon technology. We have venture investments in fusion and small modular reactors.
You've talked about your steady approach in a world of wild politics. I want to talk about your relationship with presidents. During the Biden administration, you publicly released a tough letter to President Biden. Can you talk about why?
He had written a letter to me that was released to the media a week earlier, filled with misinformation and unsupportable allegations about profiteering and price gouging after the Ukraine war began. There was no evidence. I had been in the White House the week before, and nobody mentioned it. I read the letter in the New York Times while on vacation. I wrote back saying his information was not accurate and I wanted to meet and work on solutions, but we needed an honest conversation.
I did, after it was delivered to him first.
Was that a hard decision?
No. I had to stand up for our people and our industry when we were being plastered with inaccurate facts. I owed it to our company, shareholders, and employees.
Did you ever get a response from the White House?
No. Would you say the current president's views are closer to your own?
The current president is a believer in American energy abundance as a source of economic strength and national security.
But he also believes climate change is a joke.
He has been a skeptic on the seriousness of it. But he's a believer in American energy and supports all energy. He's not a big fan of wind, but he wants America strong. We're blessed with energy resources.
Do you talk to him regularly?
I speak to him. Not regularly, but I do.
