"The Laws Of Physics And Thermodynamics And Economics Are Stubborn" Featuring Mike Wirth, Chevron

C.O.B. Tuesday

Today we had the honor of hosting Mike Wirth, Chairman and CEO of Chevron. Mike’s journey at Chevron began as a design engineer in 1982 and since then, he has held senior leadership roles in several divisions of the company. Most recently, Mike served as the Vice Chairman of the Board of Directors and as Executive Vice President of Midstream and Development before assuming his role as CEO in 2018. Beyond his role at Chevron, Mike is engaged in industry advocacy and global initiatives, serving on the board of directors of Catalyst, as an Executive Committee Member of the American Petroleum Institute, and as an Executive Committee Member of the World Economic Forum International Business Council, among other notable roles. With CERAWeek in full swing in Houston, we were fortunate to sit down with Mike to explore the current energy landscape, global energy dynamics, the future of energy, and of course, activity at CERAWeek.
In our conversation with Mike, we discuss the changing tone and focus of energy conversations and the pragmatic and realistic tone at CERAWeek, Mike’s background in engineering and its influence on his leadership style and decision-making processes, the importance of understanding customer needs and preferences in the energy sector, and the evaluation of investments that rely on subsidies. Mike shares his perspective on the integration of cultures during mergers and acquisitions, the importance of fostering collaboration and alignment while preserving the strengths of acquired companies, the future of exploration in meeting global energy needs, the evolution of shale innovation, current geopolitical risks, trends in government intervention, inflationary pressures, energy access in developing countries, and his perspective on recent developments surrounding Chevron’s acquisition of Hess Corporation. We discuss corporate net zero pledges and the often underestimated complexities involved, the overall desirability of more engineers and more problem-solving thinking, the evolving power landscape, Chevron’s capabilities in lower carbon energy and technologies, America as an energy superpower and how to maintain that status, and much more. We had a great visit with Mike and can’t thank him enough for his time and thoughtfulness. He is an exceptional spokesman for sound energy thinking.
To start the show, Mike Bradley shared his thoughts on three key events this week. Regarding CERAWeek 2024 where Veriten is an industry partner (details here), he noted themes are focused on AI, electricity, energy transition, hydrogen and permitting, with AI and electricity being mentioned in just about every conversation. US power needs are being underestimated and the energy transition discussion seems to be turning much more pragmatic. NVIDIA introduced its newest processor (Blackwell) at their conference on Monday. Expectations for NVIDIA and tech stocks were extremely elevated heading into the conference. The third key event is Wednesday’s FOMC Meeting. Mike noted that it’s virtually guaranteed the FED will keep rates unchanged given recent inflation stats printed on the hot side. Markets will be focused on Chairman Powell’s comments which could provide a clue on the number of future rate cuts. On the commodity front, last week was the first weekly close for WTI above $80/bbl since November 2023. WTI trades at ~$83/bbl as US crude oil inventories declined last week and will be drawing in the weeks ahead. He also noted that Gunvor indicated this week that Ukrainian drone strikes have damaged ~600kbpd of Russian refineries, which has strengthened crude oil and product markets. WTI time spreads continue moving steeper into backwardation, and if WTI holds above its $80/bbl support, it could reverse extreme “bearish” oil trader sentiment. He ended by noting that energy as a percentage of the S&P 500 should increase given that energy transition conversation is turning much more pragmatic, that global e