Oct. 10, 2021
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Sep.16 -- The world is facing high energy prices for the foreseeable future as oil and natural gas producers resist the urge to drill again, according to Chevron CEO Mike Wirth. He spoke with Bloomberg's Alix Steel about challenges ahead for the energy sector and consumer.
Open transcript
let's start with the tough spot that oil
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companies find themselves in in the
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energy transition like you're going to
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have the critics that are like you're
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not going far enough you're not going
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fast enough then you have the other guys
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that are like why are you spending more
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money where is my return how do you
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think about that as a ceo of a major oil
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company well yesterday we actually
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talked to investors about what what i'd
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call a winning combination
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and what that is is delivering
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lower carbon traditional business which
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but we also announced a tripling of our
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capital commitment to over 10 billion
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in new energies so these are faster
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growing lower carbon new energies that
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leverage the strengths that our company
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has built up so we laid out ambitious
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growth targets in renewable fuels
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in hydrogen in carbon capture and
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offsets these are lower carbon forms of
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energy where we can create competitive
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advantage for shareholders and it also
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solve problems for customers in the more
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sectors of the economy like aviation or
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marine transportation or heavy duty
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when you were working on the plan what
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in terms of the oil play price in terms
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of government support policy support did
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well we we start with what we know today
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and so we have models for
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population growth economic growth
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the the new energies are tougher because
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these are newer businesses i think the
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range of uncertainty is is wider on
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technology on cost on rate of market
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development and so the error bars are
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larger but we've really focused into
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geographies where we believe
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the right combination exists so these
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are places where we have the
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capabilities the assets and the
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customers to start these businesses up
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california's a great example that's
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where our headquarters are
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carbon pricing uh policies that exist to
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incentivize investment and so we're
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building a carbon negative power plant
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in california we're working on hydrogen
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bringing hydrogen out to retail in the
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transport sector and our renewable
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sustainable aviation fuel business in
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california is where it will begin so the
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conditions there allow us to invest in
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projects that should earn good returns
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and then we believe that those uh
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learnings will help us extend into other
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markets other geographies and policy
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will evolve so so how price sensitive is
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it like if oil all of a sudden goes 75
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to 40. do you rethink that capex plan
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we really are a long-term allocator of
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capital other than extremes so with
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covid where we saw negative oil prices
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and real questions we pulled capital
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spending down in that kind of an
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by and large we take a long-term view on
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these things and so commodity cycles are
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part of our business and our plans need
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robust through a range of prices for
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both the traditional energy products and
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these new energy products so they are uh
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price dependent to deliver returns but
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they're not in the short term going to
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our plans won't change if we see prices
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trend above or below unless we think
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there's a structural change so if the
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returns are depend are obviously
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what kind of return what kind of price
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did you model your returns at if you're
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looking for double digit yeah modest oil
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prices i mean oil prices that look uh no
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