From the onset of Putin’s invasion of Ukraine, a foreign policy objective inherently embedded in his worldview, the global oil/energy supply chain has been disrupted. CEO of American energy giant Chevron, Mike Wirth, directs his blame elsewhere. Wirth posits that the climate policies of western governments further decimates the gas and energy shortage. He explains the global energy insecurity as a consequence of the “premature effort for the west to transition from the overuse of fossil fuels”.
Chevron is the world’s second-largest energy company, after ExxonMobil, and produces almost 2 per cent of the world’s oil.
The world is however too reliant on fossil fuels (about 80% of global demand) for any sudden abandonment of the resource. Climate change policies then, maybe overly ambitious during an energy crunch. Wirth seemed to assess that the climate commitments set by western governments strains an already strained energy supply. The argument however is that the energy crisis prevalent today is not directly impacted by Russia's war but rather, is the long-term result of under-investment in alternate energy sources. For major oil/energy corporations, major economies were short 'trillions of dollars' in their spending on alternate energy in the decades prior to the invasion. The risk that the world faces now is that of hastily converting from a system based on coal, fossil fuel and nuclear energy to another system of alternative energy (that remains unexplored by many parts of the world).
Mike elaborates on his firm's commitment to investing in new energy technology and technology required to meet the crisis; renewable fuel, hydrogen, geothermal and storage. Whilst the challenges to meet demands are high, it is also an opportunity for energy firms to grow. Mike Wirth and other principals of energy firms have denounced claims made by US president Joe Biden that ‘Big Oil’ was making money by abusing the opportunities created by the war in Ukraine and the disruption of oil supply. But it is simply a matter of filling a vacuum created by Russian gas companies like Gazprom who have halted exports to their European markets. So how did energy companies produce the top-10 performing stocks in the S&P index in 2022?Despite calls to move towards sustainable energy, US firms like Exxon and Chevron have simply prioritized meeting global demands. Given the international status-quo, energy giants express their frustration with the limitations that are placed by climate protection commitments and forcible monitoring of carbon emissions. To oil/energy firms, affordable and reliable energy supplies should be assigned priority
; “We need to have a balanced approach to energy. And that means we have to focus on affordability, because affordable energy is really essential for economic prosperity. Reliable supply for national security, because energy security and national security are linked. And then protecting the environment” says Wirth. Should companies cut back on oil production without a commensurate regulation of carbon emmissions, the US could lose the economic advantages of holding a competitive monopoly over oil production.