Chevron CEO Mike Wirth: Demand for natural gas will be higher than expected

So we are coming off of this big fall in the price of oil. The jobs report came in weaker. There are questions about the US economy. What does demand look like right now? Globally, demand’s still pretty healthy. Last year was the highest demand in the history of, you know, the oil industry. This year, demand will grow again by probably 1,000,000 1/2 barrels a day, so a new record. And we see still a healthy economy here in the US China has gotten back on its feet. Europe stabilized and so demand continues to grow coming back in China, do you think? Yeah, I I think China, China has come out of the post COVID period of time now and we see pretty steady economic conditions in China versus a year ago, certainly. What about the supply outlook? Do you expect any change from OPEC plus in the second-half of the year? Yeah, it’s very hard to to know what OPEC plus will do. They do have some capacity primarily in a couple of countries right now and they they’ve been very focused on, you know, stable markets and trying to be sure that we don’t see volatility. And frankly, although there have been some ups and downs, as you’ve referenced, prices have been within a relatively stable band here for the last several months and I think that’s what their intent is. I wonder where you see prices relative to where you see the geopolitical risks today. There’s news that Israel wants civilians to evacuate Rafah for potential invasion into that area. Do you think the market’s getting the the balance of risks right here as it relates to the Middle East war? It’s always hard until you look at it in hindsight to really know if the market priced the risk in. If you look back at at the invasion of Ukraine, the market priced in a significant supply disruption, which really never occurred. We saw Russian barrels continue to come into the market, maybe to different countries and different buyers, but the market stayed well supplied. In this instance, an incident in the Strait of Hormuz really could change the physical supplies in the market. And I think that’s that’s what’s a little different today versus a couple of years ago is you’ve got a conflict in an area that is really proximate to significant export capacity in the world around Saudi Arabia, the Straits of Hormuz, one of the largest oil transit choke points in the world. And and if that were to be threatened or impacted, then I think markets would have to respond. So it sounds like you think the market is underestimating the potential risk here. Well, I think the risks are to the upside. We’ve certainly seen conflict between Iran and Israel, a back and forth the market began to anticipate a higher degree of risk, but that pretty quickly settled out and and I think a lot depends on the, you know, the course of events here. We’re all hoping for an end to the the conflict. But certainly as you say this evolves day by day. The other hot topic right now is natural gas and and I know AI is a big theme here at Milken. And this idea that we could be looking at an electricity shortage and I wonder how it affects a company like yours, natural gas producer, key source of electricity and whether you can step in to fill the void. Well, the US certainly has abundant supplies of natural gas. In fact, we’re exporting gas to our allies in Europe and and to customers in Asia right now from this country. The move to electrify everything, whether it’s transportation, heating and and and industrial processes and now the increased demand from data centers all requires reliable and affordable power generation. Renewables offer affordable power generation in some places with good wind and solar, but data centers don’t shut down when the sun goes down. And so we need to have the ability to provide base load supply for all of these needs. I think natural gas will be a big part of that equation going forward. And and it’s it’s a little hard to quantify right now because this is evolving so quickly on the AI side. But I think demand for natural gas is is likely to be higher than what people have been estimating up until now. So you you see it as a mix between renewables and natural gas as electricity sources. Oh yeah, I think I think we’re going to see renewables continue to grow. We need to invest in the grid to be able to deal with that growth and the intermittency. But we’re also going to need backup power for times when when, you know, renewables are dealing with their intermittency. And so coal plants are really on their way out in this country. Nuclear is expensive. Geothermal is less proven. You come back to natural gases, the most likely source of that reliable baseload supply.