Mike Wirth

carbon energy companies are doing quite well. They have record profits, record revenues, and as a result of that, some people in the White House and other places have suggested a windfall profits tax. So is the industry in such great shape that it can afford a windfall profits tax. Well, it's a cyclical industry, David. We see prices go up, we see prices go down. A windfall profits tax is u is not going to encourage more supply. It's not likely to reduce prices. In fact, it could do quite

the opposite. President Carter try to windfall profits tax in Uh. It was rescinded several years later, had collected a lot less revenue than was expected and didn't result in more investments. It results in the less investment and less productions. So normally, if you want less of something, you tend to put more taxes on it, you know, ut less smoking tax cigarettes. Uh. If we want more energy production, will more supply to bring prices down, putting taxes on energy productions probably not

a good idea. In your current job, do you have to go to Washington to talk to regulators and legislators and do you find that an uplifting experience to do that, I do have to go to Washington. UM uplifting is probably not the first word that comes to mind. I mean, their their detailed discussions and uh, and we need to help regulators understand the potential consequences of some of the

things they consider. So would you say that Washington by and large doesn't really understand the economics of the energy industry or they could learn a little bit more than they know now. Well. I have empathy for people that

sit in these roles. They have often broad responsibilities and they may not have UM personal expertise in depth in some of the areas that are responsible for So I view my job is to come in and try to provide objective input and help them understand the consequences of things they're considering, to avoid unintended consequences, and help achieve

the goals that they're looking to achieve. So when the President United States says energy companies are gouging American people, you get to be used to this when you're an energy executive. More or less. I assume, uh, you know, I don't like it, but you probably are accepting. And I disagree with that characterization. I don't think it's accurate. Um, this is a you know, we're an industry at price takers, not price makers. These are global commodity markets, and um,

and prices go up, prices come down. We allocate billions of dollars of capital our company does every year. Just two years ago, we were losing billions of dollars as prices plummeted. Uh. And so through the cycle. It's an industry that generates kind of returns on capital employed, which is I think, by the standards of many other industries, pretty modest return. The war in Ukraine has driven oil

prices up. I think it's fair to say, Um, do you think that that is a principal reason why the major energy companies are going quite well because the supply has been reduced because of the war in Ukraine. And do you think that when that war does, and eventually it will, I assume, uh, you know, have an impact on reducing energy prices in carbon areas well. The war and the associated actions have definitely had an impact on

energy markets. But if you step back and look at the broader context, we saw demand collapse with the pandemic when the world really locked down. In fact, companies in our industry had to shut in wells and stop producing because there was no place to store the oil that wasn't needed by the market. So investment levels came down. And then as the and nobody knew how long this

would last. Is the economy recovered post the pandemic, we get vaccines, demand returned um, the industry has been struggling to keep up with the rate of growth once again, and so the market was already in a in a

pretty tight situation before this war began. I do think, uh, when eventually it's resolved and all conflicts eventually are resolved, I think that uncertainty and the risk to supply from one of the world's largest suppliers will be reduced, and I think we'll see markets reflect that a number of years ago, oil prices went as low as I think

twenty a barrel. And when it was that low, major oil companies like I think Chevron and others said we can't afford to drill anymore in either let's say that Alaska, the North Sea, other places, because we need to have oil at seventy dollars a barrel to make drilling affordable and profitable. Has that come back now that oil prices are offer people now drilling in major projects around the world, they kind of get oil that's gonna take four or five or ten years to build and and drill. Or

is that not happening again? We're seeing some of that happen again. Certainly. What has really changed in the last decade, David, is the what we see in the US and the Permian Basin, but also in some other parts of this country and in other countries now is uh the ability to produce oil and gas from rock that is very very dense, very hard, and historically has not been very productive.

But with directional drilling and the ability to to fracture these formations, now we're seeing the ability to produce from areas that we couldn't before edit prices that are are lower than some of these very complex, difficult projects, and so the need for the ultra deep water the Arctic has been reduced as we see these other resources come in at at a lower cost. So how many employees does Chevron have? About thirty six in about a hundred

different countries. And how much oil do you produce a day? A little bit over three million barrels of oil equivalent per day, so mostly oil, some gas, and we convert the units on the gas to give you the energy equivalents. About three million barrels. The United States produces ten million barrels a day or something like that, closer to twelve. Well, okay, so you're producing about of the oil producing in the

United States more or less. As a company, you could say that our US production is about one point two million barrels a day, so we're less than ten percent of US production. So right now the United States is more or less energy sufficient compared to let's say the nineteen sixties or seventies, when we import a lot of oil I think we produce we probably consume ten to twelve million barrels a day closer to wen. We consume twenty million barllars a day and we produced roughly you're

saying twelve. So we're importing the equip about eight million barrels a day, which is better than it used to be. Where are we mostly importing that from? Is it from OPEC countries? Canada, our neighbors are the are the largest, uh, you know, suppliers of oil. I mean you know you heard all remember all the countries around the Keystone Pipeline. We're a big customer of Canada, who's a large resource

country right now. To get that oil down here. There are other pipelines that have been built in years gone by, and sometimes it flows by rail, uh, and so it comes by ship. You can bring it down through pipelines into ports along the West Coast, for instance, or into the Atlantic based and bring it by ship. So Canada is the largest supplier, and then other people in the region. And we we still bring some oil to this country from the Middle East, but much less than we did

back now. So I think there's much oil to be found in the Lower forty eight at this point, or even and let's say Alaska as well, or mostly we know where all the oil is and there's no more big permian basin kind of deposits anywhere. People said that over time, and then we've always been surprised, and so the US has been explored more than any other other place in the world. I think the industry has a good idea, but technology allows you sometimes to recover things

that you haven't been able to before. That's the story of shale. Uh. The other one that continues to be a positive story is deep water Gulf of Mexico, where we'll go out and drill in a mile or more of water depth and then go down several more miles six seven, eight miles into the earth and UH and find a large large fields. And the Gulf of Mexico is still relatively under explored compared to the onshore, so I think there's still room for for more discoveries. Let's

talk about Chevron itself. What are the roots of chevern? When was Chevron created? One that is started founded in eighteen seventy nine in southern California, began as a company called Pacific Coast Oil Company, made the first commercial discovering California in Pico Canyon in southern California. Became part of the Rockefeller Standard Oil Trust UH in the latter part of the eighteen hundreds and then became Standard d of California when the Standard Oil Trust was broken up. Our

headquarters at home has always been in California. We've been around for a hundred and forty three years and really a part of the world's history. Made the first discovery in the Middle East, first discovery of oil in Saudi Arabia, among other milestones, and a long history of the world

really reflected in our company. So if I go to a gasoline station and want to get gasoline from my car, is there really a difference between the oil that Chevron might be produced amazing the gasoline and one of your competitors that that gasoline is pretty much all the same. There are specifications, minimum standards that have to be met for for the products UH, and then what you find is that different companies UM either exceed those by more

or less than others. And also we have special additives. So we have a wholly owned additive company that manufactures an additive called tech Run that has a very special chemistry to keep engine parts clean. And as engines get more sophisticated, as the tolerances. Get thinner, you're gonna have carbon deposits that can affect performance in your cylinders. Your injectors tech run cleans that up better. If you're driving along and you need gas, will you stop at an

Exxon station? Or you've got to keep going till you can see a Chevron station. Keep going until I see a Chevron station. Okay, let's talk about your own background. So how does one become the CEO of Chevron? Tell us? Where were you born? I was born in Los Alamos, New Mexico. My dad worked at the National Lab UH and uh and I grew up in Colorado, Golden Colorado. And you went to college where University of Colorado and Boulder studied chemical engineering. And you said, I want to

work in the energy world. I at the time, you know, chemical engineers could work in a number of different industries. I had a summer internship where I worked in a refinery in the Denver area. Found the work interesting, I found the people interesting, and and had an offer to come to the West Coast and work for Standard of California. And it looked like a fun place to live in a place where I could do interesting work. So basically, this is the only employer since you're gradua from college

more or less for forty years, the only employer. So when you're starting there forty years ago, did you say I might be the CEO someday or did you not think that was realistic? No? I just hoped I would last to the next two weeks to get my next paycheck. That would never give a game plan. So what did you do? Did you move around the world over the course of your forty years at Chevron? What did you do to kind of rise up where you are an

operations person or an expiration person administrative person? Started out as a design engineer and worked on big projects. So UM an oil shale project, not the type that we developed today, but the other kind of oil shale you used to hear about. UM built a plant that you can't find any trace of today. Worked on a facility in California to help bring in oil from offshore, sold for pennies on the dollar. Eventually, UM a project in Africa that never happened because of civil war. So I

began by specializing in spectacularly unsuccessful projects. Uh, And at some point I said, this doesn't look like a great career path. And so I moved into our marketing business, where I built gas stations and replaced underground tanks that were made of steel with ones that were made of fiberglass. They with the leak and um you and I remember the old clickitty clackity wheels that would spin around on a gasoline pump. I used to put in the first

electronic pumps back in the day. So these were smaller projects, but I could see the beginning of the end. I start to understand the commerce and how the business worked, and from there are a variety of roles, primarily operating roles across different businesses and around the world. When did you become the CEO five years ago? Some people might say that God looks favorably upon the CEO of energy

companies because he lets them live a long time. And a number of your predecessors have lived quite a while, and some of them you're living in your same area that you're living out is they call you with advice all the time. Actually, I'm really fortunate, David. The three people have done my job immediately preceding me, each for roughly a decade the nineteen nineties, the two thousands in the in the teens. Uh live within a few miles of where I live. I see them regularly, we have

lunch together. And um, that's a plus. Other words, Uh, don't they tell you you're doing this wrong or doing that wrong? That doesn't come up? Well, I get a lot of good advice and and and um you asked earlier about advice. These are people who have actually done my job, so I really I'm interested in their advice.

They've lived through UH wars, the fall of the Soviet Union, terrorist attacks, financial crises, they've seen oil markets go through gyration, as they've dealt with geopolitical surprises, and so their advice is really valuable. During COVID, the first first thing I did was call each one of them and say, what lessons did you learn during the I see as you faced. How do you think I should handle things as we have this pandemic unfolding. Uh. So we have a great

relationship and I see them regularly. So you're still, by my standards, very young. And you've been the CEO for five years, so you could do it for quite a while and still be young. But do you have any ambition to go into the federal government as a cabinet officer or anything like that, and to do anything other than the energy industry. Would you have any other career

ambitions or this is what you want to do? You know, I love what I do, I love the company I work for, the people that I work with, and um, I don't have any ambition to do anything other than a good job. So what do you do for relaxation? Generally anything that involves family? Uh So? I have four children. Uh they're very active in outdoor activities. My wife is uh a good golfer, good skier. Uh So you'll find me on a golf course, skiing, scuba diving, fly fishing

with family when I'm not at work. And any of your children in the energy world. No, not even close. Okay, So are you a good for this? Of you that? If you have a low handicap, that's not good for being a CEO because it means you're spending too much time on the golf course. But I don't know what that's fair or not. But are you a scratch handicap golfer? Far from it. My wife is almost a scratch handicap golfer.

I caddy for her in in big tournaments. Actually, sometimes will take a couple of vacation days and carry her golf bag. So that tells you who the better golfer is in my house. What are you most proud of having achieved so far? Other than being the CEO? What do you think is that your your record of accomplishment

so far that you're most proud of. Well, the last five years have been an interesting five years for people in just about any business and UM and so you know, when the pandemic hit, we have people in ships, we have people on offshore platforms with people around the world, UH, in developed countries and in developing countries. UH. Navigating that, keeping people safe, keeping our business running, keeping the world supplied with energy has been no small task. It's been

the most challenging things I've I've ever confronted. And during that same time, we've done a massive restructuring of our business. We've made a couple of acquisitions and integrated them to make the company stronger or better companies today we were a few years ago. And I'm proud of the progress that our people have made during this challenging, in tumultuous time. But it's just a career path you would recommend to young people. Let's say, young people are watching and they say, well,

maybe I should go into the energy world. Would you recommend this to young people? There's never been a better time to come into the energy world. We're faced with this incredible challenge of meeting the demands of the world today in building a lower carbon energy system for tomorrow. The technology that's available to us, the innovation that's available to us, is greater than it's ever been, and the

chance to make a difference is enormous. If I were my younger self looking for a job, I would absolutely come into this industry. Large carbon energy companies seem to me have a difficulty. Are they producing large amounts of carbon energy which people like to consume, or are they supposed to transition to being renewable energy companies? And what are you going? For example, they're transitioning yourself a bit

to be unrenewable company. Well, we're we're focused on leveraging our strength to deliver lower carbon energy to a growing world. And what that means is in the near term, we can find ways and we are finding ways to reduce the greenhouse gas impact of the energy the world uses today. So we're reducing the emissions associated with oil and gas that the world needs today, needs very very desperately. And at the same time, we're building new lower car inherently

lower carbon energy businesses for tomorrow. So things like renewable fuels, hydrogen, carbon capturing storage, geothermal are all technologies were investing in, businesses were growing that will play a bigger role tomorrow, and we're gonna need many solutions. There is no one there is no one solution for this. So in two thousand twenty two, you bought a renewable energy company for roughly I think three billion dollars. What was that about. Why did you want to do that? Well, we had

a we had a renewal renewable fuels business ourselves. Uh, this company, Renewable Energy Group, was one of the leading producers of biodiesel and soon to be renewable diesel in the United States. And they have great capabilities in the feedstock sourcing area, and so in any fuels business. Raw materials are a very important part of the overall value chain traditional petroleum products. We have deep expertise in the

raw materials sourcing for that. In these products, you're talking about raw materials that are like used cooking oil, something called distiller's corn oil, various bean oils from soybean and other agricultural products. These are markets that we don't have a lot of experience in. The quality, logistics, commercial dimensions of those markets are things that Rural Energy Group is very good at. They have manufacturing facilities and some marketing.

We have big market positions and brand positions, particularly in states like California, that encourage this. So the combination of TOO makes a more powerful renewal energy business, and today UH in renewable area, which is obviously a growth area. UM do you think that if you were going to make more acquisitions without giving away inside information, you're likely to do more in the renewable area or in the carbon area. It's an active field of opportunity in both UH.

For US, it's really driven by strategy, asset quality, value, I mean, the typical things you would look at when when you do a deal. But as I said, over the last two years, we've we've done a big traditional energy deal, We've done a big renewal acquisition. I think in the years ahead we'll probably do acquisitions in both of those spaces. When President Nixon took office shortly thereafter, there was an oil spill in Santa Barbara and then under President Obama there was an oil spill in the

Gulf Horizon. It was I think of British petroleum right now, when you're drilling off shore, how safe is it uh to be able to avoid those kind of environmental damage? Is it much better than it used to be or greater precautions than there to be? Yeah? Absolutely? And um and I think you know, the industry has continually improved

operating practices, equipment. Uh. Certainly the regulators in the US have very high standards, who were very closely with the regulators on that, and the advent of newer technologies have continually made this safer. And so uh, these are these are challenging, difficult operations in those kinds of pressures, water depths, and environments. But the industry has a has a strong track record today. Uh. And you know there have been some notable incidents over time, but every company in this

industry works really hard to to prevent those. So, um, today do you not worry about that kind of offshore UH drilling problems anymore? Because of the safety is pretty good compared to what it used to be. You know, every day I get up and I worry about safety and um, protecting the environment. Are people working at demanding business and uh, it's a highly technical activity. We have very talented people. We've got very strict protocols and standards

to keep people safe and keep the environment safe. But you can never take it for granted. Why do you think it is that people love energy but they don't love energy companies? In other words, people in the United States around the world consume enormous amounts of oil and gas, and the people that provided, like Chevron, don't seem to be so popular. Why is that? You know? Um, I don't know exactly why it is. Uh. You know, we're a big company. The numbers are big. Sometimes big isn't popular.

Are big energy, big government, big tech? Maybe big private equities and exception to that. But you know that we're a big company. We represent less than two percent of global oil production and so in the scheme of things, a very competitive market and we're a relatively small player.

And I think you know what's important, uh to remembers we need to have a balanced approach to energy, and that means we have to focus on affordability, because affordable energy is really essential for economic prosperity, reliable supply for national security because energy security and national security are linked.

And then protecting the environment, and I think its prices get high and it gets less affordable, you find people that are upset, and part of that is because we really haven't necessarily been able to find the right balance among those three and to improve the overall image of the energy industry. Is there something you think that the CEOs or the companies can do to improve the image so that people when they walk down the streets say, wow, Chevron has done a great job for America today. How

how is that possible? Or just energy companies just don't have that kind of likely public image that's going to be so good. Well, I think what would help David is to engage in this more balanced conversation about the benefits of energy. We are a lot of people that have, um, you know, views on what some of the consequences are of the use of energy. But as you say, they

they've had made rancements in the quality of life. Uh, you know, possible that we wouldn't have imagined, uh you know, two centuries ago, and um and I think as we go forward, it's absolutely likely that we find ways to meet the needs of a growing world and produce the carbon Impat's supposed Tomorrow you decided to retire and become a cabinet officer or something, or do something else. What would you say you have achieved as the CEO of Chevron that you're most proud of. Well, I would hope

that people would say he thought of others first. He strengthened the culture of our company. He kept people safe, and made the company a better company when he left than it was when he founded. Thanks for listening to hear more of my interviews. You can subscribe and download my podcast on Spotify, Apple, or wherever you listen.