Chevron CEO: Learn to love your oil addiction, America
Those dreams you have of an oil-free world filled with quietly humming electric cars and solar panels powering your plasma screens? Lose ‘em. Want to cut carbon output, Congressman Waxman? Get real. Oil is here to stay, whether you like it or not. So says David J. Reilly, CEO and Chairman of energy giant Chevron Corp.
O’Reilly, of course, didn’t quite phrase it that way, but his message at today’s Chief Executives Club of Boston meeting I attended was clear: the sheer size the energy demands of the U.S. and developing world means oil, coal and natural gas have to play a huge role for decades to come. So get used to it and open up coastal America to offshore drilling for the 30 billion barrels of oil O’Reilly believes sit on the continental shelf.
“We [the United States] are not an energy weakling. We are an energy powerhouse,” he told the approximately 250 attendees, including hundreds of area CEOs, a dozen Massachusetts politicians and a smattering of Jesuit priests from CEO Club partner Boston College.
While acknowledging alternative energies will eventually play a key part in meeting U.S. energy needs, O’Reilly strongly warned that those wishing to cut out conventional fuels would set the country “on a straight path to a pre-industrial standard of living.” Though not mentioning him by name, O’Reilly clearly takes umbrage at Congressman and Energy and Commerce head Henry Waxman. ”We have all heard the people running for office say they will reduce carbon 20% by 2020 – sounds nice, doesn’t it, 20 by ‘20? – but they overstate how easy that is and understate the cost it will take.”
O’Reilly also took President Obama to task, again not by name, by ridiculing a carbon cap-and-trade system being proposed to help the nation reduce greenhouse gases. “If you liked credit derivative swaps, you’ll love cap and trade. This is smoke and mirrors.”
The Dublin-born and -trained engineer, who ascended to the top spots of Chevron in 2000, made his case that oil and gas are indispensable to the country’s energy security and to the noble goal of raising the developing world out of poverty. Consider, he said, that the world uses the equivalent of 240 million barrels of oil a day to meet its energy needs, a level that is 50% more than 20 years ago and is bound to grow another 30% by 2029, even with aggressive strides toward energy efficiency.
O’Reilly argued that even optimistic growth in American wind and solar power generation will only replace a minority of oil needed. Make all transportation worldwide emissions free tomorrow, he said by way of example, and it will only reduce greenhouse gases by 10%. Make all the energy grid generation worldwide emission-free and it only takes off another 25%. That leaves a lot unmet demand if there is no oil. ”We need nuclear and coal, we need wind and oil” to meet all demand, he said.
“Never forget, the most powerful economies in the world are powered by conventional fuels. Try and change it overnight and all you get is a weaker economy.”
Consider yourself warned.