Chevron CEO John Watson said Monday the downturn in the oil and gas industry is going to persist through the next year, with more difficult times ahead, as operators readjust.
Watson keynoted the Greater Houston Partnership's annual State of Energy luncheon. The road ahead is going to be a bumpy one, he told the audience.
"I think it's going to be tough for the next 12 months." What's lingering is the time it is taking to revamp bloated operations that grew during a period of heady oil prices.
"We're finding that maybe we got a little sloppy in the past few years," Watson said of Chevron and its peers. The focus now is to complete projects under construction while "getting our costs down and becoming more balanced."
In the long haul, the industry is going to recover, led by emerging markets that are in dire need of energy, he said. Demand for fossil fuels should continue to increase "over the next 20 years and beyond...We have a great deal of the world just entering the industrial phase."
Watson shared the stage with Amy Myers Jaffe, executive director of energy and sustainability at the University of California-Davis, who posed the questions. Many of his comments argued for restrictions on U.S. crude oil exports to be lifted.
Consumers are the biggest losers if the ban isn't lifted, he told the audience. Chevron is integrated, with upstream operations and a downstream business that includes refineries. Many U.S. independent refiners are opposed to lifting the ban, arguing that their costs will rise. Watson said that doesn't jibe with world markets.
"There is no case from the consumers' side because the sellers of gasoline are going to seek the highest price," he said. "If you artificially keep crude oil prices down, there will be less crude oil produced on the world market. That will drive prices up."
The Chevron chief said the United States should have lifted the export ban years ago.
The House Energy and Commerce Committee in September approved legislation to lift the ban, which clears the way for a vote in the House. However, legislation could face an uphill battle in the Senate.
Watson was asked if lifting the crude oil export restrictions could boost global prices, thus triggering more output by producers. "It's one of those things we debate endlessly -- for no reason," he said.