NEW YORK -- Chevron CEO John Watson notices something important as he visits his company's operations around the globe: Governments everywhere find high energy prices much scarier than the threat of global warming.





Next year Chevron will invest $33 billion -- more than it ever has -- to drill wells, erect platforms, build refineries and scan for undiscovered deposits of oil and gas. Among its biggest projects: A natural gas operation in Australia that will ultimately cost Chevron and its partners $65 billion to build. Also planned are three deep-water drilling and production projects in the Gulf of Mexico that will cost $16 billion.

Watson, a 55-year-old California native and Chevron lifer, joined the company in 1980 as a financial analyst. Before becoming CEO in 2010 he was vice chairman in charge of strategic planning, business development and mergers and acquisitions. He also ran the company's international exploration and production business, led the company's integration with Texaco and was CFO.





A They don't feel like they have the choices. Most products that you consume every day, you have a choice. In energy you have less choice. And as costs rise, it hits the family budget. It's a convenience that we like, but we'd rather pay less for it.

Q Is there anything you can do about that?


Q What do you think is the biggest misunderstanding about your company or your industry?



A I think so. We want to produce at a price our customers can afford, and I think there's ample resource to do that for the foreseeable future.


A On balance it's a good place to do business. We always have to be aware of what other governments are doing, and we have to be sure that we stay competitive. When I met with the president with some of my colleagues a couple weeks ago, that was the first thing that people talked about. It wasn't about taxes per se, it was about staying competitive.

Q People on all sides of the energy debate have long complained about the lack of a comprehensive energy policy in the U.S. Are we wishing for something that just can't happen in this country? And if not, what would it look like to you?

A Historically the United States has had a wonderful energy policy. We're blessed with a diversity of resources. We have oil. We have gas. We have coal. We have nuclear. And renewables. And as a result, one of our biggest competitive advantages has been affordable energy. You need a strong economy and you need affordable energy to fuel that economy.

Q Do fossil fuel producers bear the responsibility for curbing greenhouse gas emissions?

A We have the responsibility to deliver our energy in an environmentally sound fashion. The greatest advancements in living standards in recorded history have taken place in the modern hydrocarbon era. I don't think that's coincidental. Our leaders have to make a decision. Do they want that to continue or do they have a better solution for us? So it's not my call.

Q How should society go about reducing greenhouse gas emissions?

A If you look around the world, the countries with the best environmental practices are the wealthiest. There's a reason for that. If you're worried about where your next meal is going to come from or shelter over your head, your focus is on those things.

Q The U.S. is a wealthy country, how should we reduce emissions?

A Well, we are a wealthy country. On the other hand, the economy is growing slowly. We have high unemployment. I think that's part of the reason why the president said now is not the time for a carbon tax, because he recognized that that would put pressure on the economy and put pressure on our energy prices, put pressure on manufacturing business, put pressure on consumers.

Q When it's time to address the carbon issue, how should we do it?



Q Will fracking be curtailed in this country?

A I see very little obstacle to it, notwithstanding all the rhetoric. Now it's being done in some different areas. People aren't used to it, and there have been legitimate concerns expressed, like truck traffic at a simple level, but also concerns about water supplies. They're understandable anxieties. And so we have to work through those with the governments. I think in due course we'll do that because they'll see the advantages to it.

Q Will natural gas become a bigger part of the energy mix?



A We have global standards for how we operate. And it's our responsibility to operate to those high standards everywhere. We use local labor in almost all cases and we spend an enormous amount of time training people. We provide half the natural gas in Bangladesh. I've been there a number of times. If you go to a construction site, you won't see hard hats. You won't see shoes in many cases. And so we teach people safety standards.