Chevron’s chief executive officer, Mike Wirth, has pushed back on the persistent accusations by America’s Joe Biden that oil companies are profiteering from the surge in prices after the Russian invasion of Ukraine.
Wirth told Bloomberg Television that the oil industry generates around 10% returns on capital employed through the cycle. “Through the cycle, it’s an industry that generates 10%-ish returns on capital employed, which is I think, by the standards of many other industries, a pretty modest return,” he said.
The Chevron boss also denied the allegation that oil firms are gouging consumers with gasoline prices, after the national average price of gasoline hit a record high in June.
The oil market sets the price of oil and gasoline, not producers, Wirth said, adding, “I disagree with that characterization,” when commenting on the accusations of price gouging.
Last October, Biden had threatened that if oil firms don’t invest in increasing production and refining capacity, “they’re going to pay a higher tax on their excess profits and face other restrictions.”
With the decline in U.S. gasoline prices in recent weeks, the rhetoric of blaming the oil industry has subsided at the expense of the Administration taking credit for the falling prices at the pump.
Wirth stated that a windfall tax on oil companies would not be beneficial for either lowering U.S. gasoline prices or encouraging more supply.
“It’s not likely to reduce prices; in fact, it could do quite the opposite. So normally, if you want less of something, you tend to put more taxes on it. If we want more energy production, we want more supply to bring prices down, putting taxes on energy production’s probably not a good idea.”
Chevron believes that it needs to have a balanced approach to energy, focusing on affordability and reliability, alongside protecting the environment, Wirth said.