Chevron Keeps It Old-School
Bloomberg Businessweek|August 17 - 24, 2020
Chevron Keeps It Old-School
As rivals go green, it’s sticking with fossil fuels
James E. Ellis

Speaking to the Texas Oil & Gas Association in July, Chevron Corp. Chief Executive Officer Mike Wirth assured his audience that the global clamor for clean energy “doesn’t mean the end of oil and gas.” On the contrary, Wirth said, the energy business is simply undergoing another of its natural transitions. “We’ll find ways to make oil and gas more efficient, more environmentally benign,” he said. “And it will be a part of the mix, just as biomass and coal are still enormous parts of the mix today.”

To activists alarmed at the urgency of the climate crisis, Wirth’s comments are as out of touch as they are predictable, coming from someone who profits from the status quo. For unlike its rivals in Europe, Chevron is betting its future less on renewable energies such as wind and solar and more on the subterranean stuff derived from hydrocarbons. It’s a multibillion-dollar gamble that would have been even less surprising before the coronavirus reared its spiky head. By eviscerating demand for petroleum products when business and consumer activity suddenly slowed, Covid-19 has shown the world’s biggest oil and gas companies a vision of a bleak future in which they’re neither wanted nor needed.

A chastened BP Plc responded on Aug. 4 by announcing dramatic steps to address climate change, including an unexpected vow to reduce oil and gas production 40% over the next decade; CEO Bernard Looney said the strategy was “amplified by Covid.” In sharp contrast, Exxon Mobil Corp. has reiterated its commitment to being oil’s last man standing decades from now. Chevron, for all of Wirth’s prognosticating about crude’s bright future, is pursuing a more nuanced path that embraces something frequently alien to Big Oil: flexibility.

A chemical engineer and Chevron lifer, Wirth rose through the business’s refining side, where he says you can’t rely on oil prices and must “make your own margin” each year. He has a wait-and-see, stick-to-what-you-know, no screw-ups approach. The company he took over in 2018 was contending—like Exxon—with a slew of globe-trotting missteps that cost too much and produced too little in returns.

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August 17 - 24, 2020