Ruthless Podcast with Chevron CEO Mike Wirth

I'm doing very well today. Glad to be here.

A little bit. A little bit.

It was like when the finance people, when Michael Lewis writes a book about you, you know, you've got a problem.

Yeah, so we have people on the ground. So my first sense is, you know, the highest priority for us is taking care of our people, keeping them safe, keeping our operations safe. We operate in half a dozen different countries in that region. We've evacuated hundreds of expatriates and expatriate families. We've got still thousands of national employees on the ground that are at risk. And so focusing on their safety in a time like that is job number one for us. Our operations have been impacted in some countries. We've had to slow down production in chemical facilities and in oil and gas production. And so we're subject to the kinds of things you're reading about where tanks are filling up, there's no place to move some of the production, and so we're having to slow down or shut in operations. Markets are really hard to predict and, you know, when we do crisis management exercises, which in our business are a normal thing, the big one has always been something in the Middle East that shuts the Strait of Hormuz because there's so much of the world's energy flows through there every day. And as we've seen now with just 10 days or so of that effectively being closed, markets are very uncomfortable, uncertain, volatile, and unpredictable. And so the situation on the ground seems to evolve every day, you know, in terms of the military operations. And we're seeing actions now, today there was an announcement about a big release of strategic reserves, the biggest release that's ever been done. I think that's a good move. It sends a signal to markets that we're going to bring production into the market that doesn't have to flow through the straits. And this is what these reserves were set up for. They've been used for a lot of other things over the years, but they were actually... government at one point, so you know how that works.

So yeah, so you know, always in a situation like this, you pray for human life to be spared and the conflict to end in a way that minimizes the impact. And certainly, you know, that's how we're approaching this.

Oh, 100%. The US is the world's largest producer of oil, largest producer of natural gas, number one in natural gas liquids, number one in LNG, number one in biofuels, number one in nuclear, number two in renewables, number four in hydro. We've got an abundance of energy resources that should be developed for the economic benefit of our country, for the security of our country. And we've got great industries across the board, including in wind and solar, but also in oil and gas and nuclear. We truly should encourage all of the above. There's no one that's perfect in every solution. But we're blessed with an abundance of energy resources in this country. And I think the administration sees that and wants to encourage development because it knows what it means for our economy, our competitiveness, and our security.

Yeah, I mean, energy is what keeps the lights on. It keeps the trains running. It keeps the Amazon packages showing up. It's literally the food we eat, the clothes we wear, all of it depends on it. You know, you saw during COVID when the whole global economy basically shut down, oil demand dropped by about 10%. During a complete shutdown of the global economy. So we need oil and gas and energy for every aspect of our lives. And now that we've got the ability to turn energy into knowledge, right, into intelligence, the demand for that is only going up. We're working with all the big technology companies to try to help meet their energy needs. And every one of them is constrained by what they call compute, which really means not enough of these GPUs, not enough data centers. But fundamentally, the constraint on development in the US is energy. We haven't seen power demand or electricity demand in this country grow much at all for the last 20 years. In China, it's been going almost straight up. And so in this country, the permitting processes, development processes are constraining the ability to grow this. And it's a real problem. I mean, there's a competition between our country and China to take the leadership in this technology. And so actually earlier today, I was at a conference here in Washington. A lot of people talking about that, including cabinet secretaries are talking about how do we streamline permitting? How do we encourage development? Tech companies who are saying how do we bring these data centers online and not increase electricity prices to consumers because that's becoming a political issue. And so it is just another illustration of how vital energy is to our economy and affordable and reliable energy. And for a while, the West, certainly you can look at Europe who still may be stuck there, became so obsessed with just one aspect of it which is the environmental dimension of energy that affordability and reliability were really kind of forgotten. Turns out that's pretty important until the tap gets shut off and then all of a sudden the prices go up and you're not sure you're even going to have it. And now they have an affordability debate and a reliability debate. And so our country is blessed with policies now that we see that encourage investment and really do benefit our economy and I think it'd be wise for us to stay on that path.

Yeah, I am. I mean, if you look around the US, the states that have actually seen some of the highest levels of development of data centers and AI are the ones who have added a lot of power to the system. I live in Texas now and I was just talking to somebody today who runs a power business in Florida. If you go back 20 years ago, prices in Florida and California were electricity prices about the same. Today, California is twice as expensive.

You might have some more insight into why. You live in Texas. And so it can be done and it is being done in some parts of our country, not all parts of our country, but yeah, there is absolutely a pathway to develop data centers, to create the jobs that go with that, the economic benefit that goes with that, and the investment in the energy to support it. So that in fact, you know, the big tech companies, there were two of them this morning that were speaking, both of whom were committed to and have signed a pledge with the president to say look we're going to find ways not only to bring our own power but to bring more power than we need for our operations to help make sure that we're alleviating the impact on others. And I think that's a responsible way for them to think about this and to approach it and we're trying to work with them to accomplish that.

Well, I'll tell you one of the things that I hope people are taking a hard look at again are the building trades and construction trades. We have in this country and we rely on tradespeople to do an awful lot of our project work. But what's happened, if you look at the demographics of it, the people that do this work are my age, and they're graying out of the workforce. They're retiring. And we don't have young people. Young people are all told, 'You need to go to college. You need to get a four-year degree.' That's not for everybody. And I'm not putting a value judgment on it, but there are some people that would really rather work with their hands. They'd work outside. They'd like to build things. And we've got a great system in this country, community colleges, trade schools, programs, apprenticeships that can bring people into the trades as pipefitters, welders, electricians, instrument techs, you can make a six-figure income. You can get a good health plan and retirement in those kinds of jobs. And if we see the kind of infrastructure buildout that it would take to meet the aspirations of these companies, we're going to need a lot of people that can do that. That's one of the big constraints right now are energy, gas turbines to generate the energy, and people to build these plants. And so I think again this morning at the conference I was at, there was an announcement made of a big new training program. The head of the building trades was there. We had cabinet officials there. They get it and they want to see people go into these jobs. And particularly, you know, you read about and you guys see this kind of young males in our society that don't feel like they've got a future. They're disaffected. They're, you know, in the basement playing video games. You got issues with drug problems and all this other stuff. You create a future with good employment, the chance to have a good life, take care of your family. I think there's a lot there to be said for those kinds of jobs.

There is. And it's beyond AI, right? We're talking about bringing chip fabrication back to this country. We're talking about building LNG export facilities. There's all kinds of, I mean, infrastructure is one of the things that at least rhetorically seems to get bipartisan support in this town, right? Everybody likes infrastructure now. They like their own kind of infrastructure more than somebody else's, I guess. But you know what made this country great was in the 1800s building the railroads and then the middle of the 1900s building the interstate highway system and laying the fiber that has been laid and building ports and airports. And we need to invest in pipelines and power transmission and fiber and infrastructure. And that's driven our country's economy for 150 years.

Yeah. I mean, I do think these, you know, there are real fears out there. And I won't quote the numbers, right? But I was talking to somebody a few months ago that said in the 1900 census in the United States, it's like 60% of the people filled out that their job was related to agriculture in some form or fashion. In the census 100 years later, it's like 2% of the people are involved in agriculture. Population of the country has expanded 10x. The food supply has expanded more than 10x. And yet we're doing it with a fraction of the percentage of the workforce. And I think it's hard when these shifts come to see where the new jobs, where the new opportunities. It's maybe easier to feel the fear of something. But I'm with you. I think there's a whole bright future that this enables if we seize it and if we lead in it.

You know, it's funny. A few weeks ago when the stock market started to, you know, the tech companies, you know, lost a little bit of their halo and you saw money move into other sectors and including ours. A reporter from one of the news agencies texted me and said, 'Hey, it must be nice to be in a business that makes a real product that people really need as opposed to just write software that people can decide they don't really want anymore.' And I texted back to the reporter. I said, you know, about two years ago, everybody was telling me they didn't need our product anymore and we were going out of business and our assets were all going to be stranded. So I guess maybe we're going to be around for a little while.

Yeah. So, we've been in Venezuela for most of the last hundred years and Venezuela's been through some ups and downs over that period of time and our company's been through some ups and downs with them. You go back to the 1980s, there was a point in that period of time where Venezuela's GDP per capita was the fourth highest in the world. It's higher than Japan. So it was a country of tremendous promise, tremendous prosperity. They had a great education system. They had a vibrant economy. It was kind of the jewel of Latin America. And of course over the last period of time, it has seen a very different political leadership.

And yet, you know, we play the long game, right? Venezuela's got more oil resource than any country on the planet, including Saudi Arabia. It's right in America's backyard. It should be a priority for America. And it's been a subject of sanctions under both the first Trump administration, then the Biden administration, again under this administration until very recently when there was a different tact taken. And at least in the early days right now I've seen positive signs. They've reformed their hydrocarbon law which makes it more attractive for investment. The interim president has taken meetings with Secretary Wright. Secretary Burgum was down there last week. As I've spoken to them, they've been very encouraged by the discussions. I think they recognize there's more to be done. Food prices have come down. There's more food on the shelves. The flow of funds into the economy is now being influenced by the rules that the US has set up which is resulting in less pressure on inflation. I think the average person in Venezuela and we've got a lot of Venezuelan national employees that work for us are seeing signs of improvement. And you know, there's more to be done and you don't get into a situation like this overnight. You don't get out of it overnight either. But you know, we're pleased to be on the ground. We want to be part of building a better future for the people there and just a few blocks away from here having some discussions about that today.

You know, for a while there were no other American businesses in the country. We were the only one. The embassy has been shut down since 2019 so it's going to take some time I think to reestablish the kind of diplomatic presence there, the kind of business presence there that we once had. But that's certainly the administration's objective. And I've talked to people in the business community that are encouraged by that, that are seriously looking at going down there. I know the administration now has some people on the ground in Caracas and intends to grow that footprint. And so, you know, things are moving in a very interesting direction.

Oh boy, I really really like a big thick Wagyu ribeye steak.