Chevron CEO Expects High Oil Prices to Stay

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Chevron CEO Expects High Oil Prices to Stay

SAN RAMON, Calif. -- In 2000, when David O'Reilly took the reins at Chevron Corp., a gallon of gasoline cost $1.30, with a barrel of oil at $25.60. Today, crude oil is priced in triple digits and gas is approaching $4 per gallon in many areas of the country.

O'Reilly recently sat down with the Wall Street Journal to explain his view of the global energy market and why he thinks the world will continue to rely on oil, natural gas, nuclear energy and coal.

O'Reilly maintained a global view of the energy industry, telling the Journal "the price of crude is not determined by drivers in Texas. It is determined by the total demand for energy globally. Oil production in this country has been in decline, and we're importing more and more oil. And we're competing for that oil with the people who are importing it into other countries to satisfy their needs. That's what's impacting the price at the pump today."

He also defended his company, telling the paper his company has no control over the cost of oil. "In reality, even though we're a very big company, we're a very, very small producer."

While O'Reilly said he couldn't predict the price of oil in the future, he told the Journal the market will probably not rise significantly higher, but it will also never return to the "relatively low levels we experienced in the late '90s and early 2000s."

People are already changing their behavior due to the high price of energy, according to the executive.

"We've seen gasoline demand drop somewhat in the first quarter of the year. People are using gasoline more efficiently. Big trucks are selling much more slowly. Smaller more efficient automobiles are selling [better]. The market is telling us that behavior change is required, and I think we're starting to see it, but we need to see more if it."

As for alternative fuels, O'Reilly told the Journal finding a viable nonfood source for biofuels is still years off, because it has to be able to make a meaningful contribution at the commercial scale. He also noted that the thought of oil independence is unrealistic based on the time frame most politicians refer to.