From commuters to futures traders, everyone wants to know about the price of gasoline. But the man who runs one of the world's largest purveyors of black gold has a lot of other things on his mind too. Dave O'Reilly, CEO of ChevronTexaco, chatted with TIME correspondent Jeffrey Ressner about the environment, alternative energy, global unrest and, yes, the price of gas.
TIME: ChevronTexaco recently announced the biggest profits in its history, driven largely by the sharp rise in gas prices. Should folks who aren't shareholders be happy about that?
DAVE O'REILLY: I hope that people would be happy. When you see high profits from a California-based company, the media is usually complimentary. They say, "Look what Intel did!", or whatever. So why isn't it a good thing for us to have strong profits when we provide so much employment, pay so much in taxes, and we're a positive force in the community?
TIME: But don't people ask you every day why the price of gasoline has got so high?
O'REILLY: In historic terms, it really isn't. It's about two-thirds of what it was in 1981, when adjusted for inflation. The price of everything has gone up, and I'd argue [that] the price of gasoline is actually a good value. In 1981 dollars, adjusted for inflation, a gallon would cost $2.84.
TIME: Crude is about $50 per bbl. Where do you see oil prices heading the rest of winter and into summer?
O'REILLY: We're about finished with winter. Typically, the early part of the year in the second quarter is the lowest-demand time. Absent some disruption in the world, I expect crude prices to moderate a little bit in the next few months. But you've got to put qualifiers around that. We're notoriously bad predictors.
TIME: An OPEC production cut in March could further reduce U.S. inventories. What's the least painful way for us to deal with that?
O'REILLY: Conservation. It sounds trite, but it's clear the balance between supply and demand has become much tighter. Prices are higher, so there's an added incentive to be energy efficient. Make sure your automobile is properly serviced, and don't overaccelerate or overbrake. That can save 5% to 10%. At home, become more aware of thermostat and light settings.
TIME: How has the war in Iraq affected oil prices?
O'REILLY: It adds an element of uncertainty to supply. Even the prospect of disruption makes buyers uneasy and leads to price volatility.
TIME: Is instability in the Middle East a threat to ChevronTexaco's bottom line?
O'REILLY: We have a very diverse geography. Most of our company's oil comes from the U.S., Central Asia, Kazakhstan, Indonesia, Australia, Africa and Latin America. Net production in the Middle East is only 150,000 barrels a day out of the 2.5 million barrels we produce.
TIME: What is the biggest single factor affecting your business?
O'REILLY: Surging demand in Asia--specifically, China and India--which has caused the world capacity to be fully utilized. These developing economies are growing rapidly and require energy to grow. There's little spare capacity.
TIME: A new book called The Bottomless Well claims we're actually drowning in oil and other natural resources, that we just need new techniques to coax them from the earth. Do you agree?