Charlie Rose Talks to Chevron CEO John Watson

How do you answer when someone asks about the prospects for fossil fuels?
If you think about the last 150 years, all the advancements in living standards, everything that we enjoy—light, heat, transportation by land, sea, and air—everything we value is coincident with fossil fuels. New York would be dark without them. Fossil fuels are important now and will be for many, many years to come. It’s going to take nuclear. It’s going to take coal. It’s going to take renewables. Remember, the developing world needs all this energy to raise living standards, because they aspire to the things that we have.

On the issue of oil’s price swings, is it just supply and demand?
At its simplest, it is. What’s not told is that demand rises relatively predictably over time, but supply comes online in big chunks. The industry does many long-lead projects. And if you get supply and demand a little bit off as you’re building that new capacity, you can get big excursions up and down in price. And that’s what we saw recently. Over the last five years, we had production that went offline in the Middle East. So prices went up. Then we got it a little bit off as the economy slowed down and Saudi Arabia and Iran returned supplies to production.