Chevron CEO John Watson had his hands full Wednesday at the oil company’s annual shareholders meeting in San Ramon, Calif.
As usual, he faced tough questioning over the company’s $19 billion pollution lawsuit in Ecuador. Some of the exchanges grew tense, and one of the speakers was ejected from the room. For a full account, check out my story here.
After the meeting, Watson took a few minutes to talk with reporters, with topics ranging from the Monterey Shale to climate change. A few highlights:
THE MONTEREY SHALE
Hydraulic fracturing has produced a flood of new oil production in North Dakota and Texas. But so far, that hasn’t happened in California. Companies including Chevron have been trying to wrest oil from the state’s vast Monterey Shale formation, with limited results.
“I think the jury’s out a little bit on the Monterey Shale. … I don’t think we’ve completed — the industry has completed — the assessment enough to reach a conclusion. Others have been very bullish and have spoken out on this.”
Watson is not convinced the Monterey Shale will prove profitable, at least for a large company like Chevron.
“We haven’t seen the same economics that others have up to now.”
Watson insists that any smart energy and climate policy has to balance prices and availability with the environmental benefits.
“I think we can make some progress on carbon emissions as well, but I think it’s going to take a lot longer than people think if you’re going to balance out all of those factors.”
“One of the things that’s happened is we’re spending a lot of money subsidizing energy that isn’t going to get us to the kind of reduction in carbon emissions that people would like it to.”
While he stops short of calling money spent on solar power and other renewables wasted, Watson says the country should focus more on conservation and early-stage research on new energy technologies.
“I’m not going to use the term waste. I’ll just say that when you have very significant subsidies for energy that will raise the cost of electricity to consumers, you may have satisfied one objective, but you’ve raised the cost of energy for consumers.”
While a carbon tax could drive conservation, Watson sounds less than enthusiastic.
“Well, that gets into the trade-offs that policy makers have to make. If you want more expensive energy, you can put a carbon tax on it, and you will get price-induced conservation. And that will have an impact on consumers, raising costs to consumers. It will have an impact on economic activity. That’s a decision that will impact the cost of energy for business. It will move energy-intensive activity out of the jurisdiction that imposes the tax. So that’s a decision for policy makers to make.”