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Start for freeThe Path to the Top: A CEO’s Journey
For over three decades, the role of an investor in private equity seemed to embody the highest calling in business. But what does it take to reach the apex of leadership in one of the world's largest energy companies? Chevron's CEO Mike Wirth's journey to the helm of Chevron is a story of strategic moves, an understanding of the energy markets, and a career built on adapting to the dynamic industry landscape.
From Engineer to CEO
Mike Wirth's career at Chevron began 40 years ago when he joined the company as a young college graduate. His rise to CEO was a trajectory filled with diversified experiences, from engineering to marketing. The path wasn't straightforward; it involved navigating through both successful and 'spectacularly unsuccessful' projects. But it was his willingness to learn and adapt that carved his path to leadership.
Understanding the Oil World
The state of the oil world today is a complex one, influenced by market cycles, geopolitical tensions, and the push towards renewable energy. As Wirth highlights, the industry is cyclical with prices fluctuating based on various factors. The introduction of a windfall profits tax, as suggested by some policymakers, could potentially discourage investment and production, leading to less supply and higher prices – the opposite of the intended effect.
Engaging with Washington
Wirth's role requires him to engage with legislators and regulators in Washington, a task he approaches with a focus on educating policymakers about the intricacies of the energy industry. His goal is to convey the potential consequences of proposed regulations to avoid unintended outcomes that could hinder the industry's ability to provide energy.
Market Dynamics and Profits
Chevron, like other energy companies, is subject to the whims of the global commodity markets. The notion of energy companies 'gouging' the public is a misunderstanding of the industry dynamics, according to Wirth. The recent profits seen by the industry are due in part to the tight market conditions exacerbated by the war in Ukraine and the pandemic's impact on demand and supply.
The Future of Energy Production
On the question of future energy production, Wirth emphasizes the importance of technological advancements. With the ability to unlock new resources through techniques like directional drilling and fracturing, the industry is less reliant on challenging and expensive projects like deepwater or Arctic drilling. Chevron's production reflects a mix of oil and gas, contributing significantly to the U.S. energy market.
The Roots of Chevron
Chevron has a storied history, dating back to its founding in 1879 as the Pacific Coast Oil Company. It was a part of the Standard Oil trust and has played a pivotal role in the global energy sector, with discoveries in California and the Middle East. Today, Chevron operates in about 100 countries with approximately 36,000 employees.
Transitioning to Renewable Energy
In the face of climate change and the renewable energy transition, Chevron is leveraging its strengths to deliver lower carbon energy solutions. The company is investing in renewable fuels, hydrogen, carbon capture, storage, and geothermal technologies. The acquisition of Renewable Energy Group for $3 billion underscores Chevron's commitment to expanding its renewable energy capabilities.
The Role of Energy Companies in Society
Despite the essential role of energy in modern life, energy companies often face public scrutiny. Wirth suggests that this could be due to the sheer size of these companies and the complexity of the industry. He argues for a balanced approach that considers affordability, supply reliability, and environmental protection.
A Legacy of Leadership
As for his own legacy, Wirth hopes to be remembered for putting others first, strengthening the culture at Chevron, keeping people safe, and leaving the company in a better state than when he took over. His leadership during challenging times like the COVID-19 pandemic has been marked by seeking wise counsel and focusing on the well-being of his employees and the company.
In an industry often characterized by its resistance to change, Wirth's leadership at Chevron stands out for its forward-thinking approach. Under his watch, Chevron is not only navigating the current market dynamics but also preparing for a future where renewable energy plays a larger role.
For a more detailed exploration of Mike Wirth's insights on leading Chevron and the energy industry's future, watch the full interview here: Chevron CEO Mike Wirth Interview.
