Chevron CEO Calls Potential Diesel Export Ban ‘Unwise,’ Warns of Worsening Energy Crisis
Mike Wirth states that restricting US diesel exports could destabilize global supply and harm allies.
Chevron CEO Mike Wirth on Wednesday cautioned against a potential U.S. ban on diesel exports, arguing that such a policy could exacerbate the global energy crisis and undermine relationships with allies. "Export bans, be they in the US or in other countries, actually take supply off the global market and they run the risk of making the situation worse," Wirth told CNBC's “Squawk Box Europe.”
His comments come after President Trump had previously indicated he was "very seriously" considering a ban on diesel exports from the United States, the world's largest supplier of the fuel, in an effort to lower domestic prices ahead of the midterm elections. Wirth emphasized the U.S. has been a "reliable supplier to the world at a time when it needs it" and suggested that restricting exports would create uncertainty among allies.
President Trump ultimately decided against the ban last Friday after European nations agreed to release substantial amounts of diesel and crude oil from their reserves. Trump also signed an executive order allowing for a broader use of tax-exempt diesel fuel. "Europe has a lot of diesel, and they’re going to be making a major world contribution, and so are we," Trump was quoted as saying by Politico. "And we’re not going to be doing the export ban."
Brent crude oil prices saw a 2% increase to $102.55 a barrel on Wednesday, driven by concerns over dwindling reserves attributed to Houthi attacks in Saudi Arabia and storm-related production disruptions in the U.S. Gulf Coast.
Wirth described the global crude inventory situation ahead of the winter as "very serious." He noted that while inventories were high at the beginning of the year, commercial and strategic reserves have been drawn down, and sanctioned barrels have been released into the market. "Those are all buffers in the system that have bought us time, but they’ve been drained. And so, we’re at much lower levels of inventory right now and it makes the system more vulnerable to disruption," he explained.
The U.S. Strategic Petroleum Reserve is currently at approximately 283 million barrels, its lowest level since the 1980s, following a global release of 400 million barrels earlier in the year.
In related energy news, Wirth highlighted Venezuela's potential role in Chevron's long-term strategy. The company plans to more than double its production in Venezuela over the next five years, increasing output to 600,000 barrels per day by 2031 from the current approximately 280,000 barrels per day. "Longer term, I think Venezuela can be part of a more secure energy system," Wirth said, though he cautioned that Venezuela's potential production increase in the short term is dwarfed by supply risks in the Middle East.
Chevron's stock has risen 33% this year, and the company reported its highest quarterly profits in six years in July, surpassing Wall Street expectations due to soaring crude oil prices.