Chevron chief blames western governments for energy crunch

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Western governments have made a global oil and gas crunch worse by “doubling down” on climate policies that will make energy markets “more volatile, more unpredictable, more chaotic”, the head of US supermajor Chevron has warned.

Mike Wirth, Chevron’s chief executive, said a premature effort to transition from fossil fuels had resulted in “unintended consequences”, including energy supply insecurity from crisis-hit Europe to California.

Despite heavy global investment in renewables in the past 20 years, fossil fuels still met about 80 per cent of global demand, and governments had to hold an “honest conversation” about the scale of the energy challenge, Wirth said.

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“The reality is, [fossil fuel] is what runs the world today. It’s going to run the world tomorrow and five years from now, 10 years from now, 20 years from now.”

The supermajor boss’s comments come as western governments’ climate commitments clash with an energy crisis following Russia’s invasion of Ukraine, which has sent inflation soaring and threatens to topple the world into recession.

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But Wirth said the source of the energy crunch predated Russia’s invasion and followed years of under-investment in new oil supply. Annual capital spending on oil and gas projects was now about half the rate seen in years before the pandemic, he said, even though demand for the energy has continued to rise.

Meanwhile, spending on alternatives to oil and gas was “woefully short, trillions of dollars short”, Wirth said. The mismatch “illustrates the risk in moving from a system that keeps the world functioning today aggressively to another system, and shutting down nuclear, shutting down coal, discouraging oil and gas”, he added.

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“If people want to stop driving, stop flying?.?.?.?that’s a choice for society,” he said. “I don’t think most people want to move backwards in terms of their quality of their life?.?.?.?our products enable that.”

The US Congress recently passed sweeping new climate legislation, including $370bn worth of subsidies for clean energy, designed to accelerate an energy transition in the US.

But the Biden administration has also pushed for more immediate solutions to drive down the soaring US petrol prices that have dented the president’s approval ratings. Last year, Biden took aim at “potentially illegal conduct” by companies such as Chevron and ExxonMobil and clashed with Wirth this summer after telling the supermajors their record profits were “not acceptable”.

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“There’s not a lot of deep energy expertise in the administration. There’s a point of view that you find quite visible in the administration that we can move from system A to system B very quickly and easily. And it’s not that simple.”

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