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San Ramon, Calif. -- David O’Reilly, chairman and CEO of Chevron Corp., said the more than 60-percent drop in oil prices since the middle of summer is "working for consumers, because they're seeing the benefit in lower gasoline prices," during an interview with CNBC business news reporter Maria Bartiromo, and posted at Businessweek.com.
"But from an investment standpoint," O’Reilly added, "most of our investments are made on the basis of a long-term price assumption that's considerably lower than the prices we've experienced in 2008."
Oil prices slid to near $55 per barrel Thursday before rebounding slightly, as bad economic news from many of the world’s largest countries increased fears that a global recession will reduce demand for oil.
In an interview with the Closing Bell anchor, conducted as Chevron began pumping crude from its new $1.4 billion Blind Faith platform in the Gulf of Mexico Nov. 12, O’Reilly pointed out that even at $50 to $60 per barrel, oil is priced high relative to where prices were at the beginning of 2007. "Only in 2008 have oil prices really exceeded $70 a barrel for the year on average," he said.
Commenting on the presidential campaign talk about the need for more drilling and energy self-sufficiency, O’Reilly said while he is an advocate of opening up more of the offshore coastline to environmentally sound drilling, the nation won’t get to self-sufficiency by drilling alone.
"We've got to work on all of our energy sources," he told Bartiromo. "We've got to work on energy efficiency. We've got to work on nuclear, which is a very important source of electricity. We've got to work on coal, which provides 50 percent of our electricity. We've got to work on the renewables, which are very small today. People don't realize how small. We need all of the above."
The Chevron executive also criticized the democrats’ call for a windfall tax on oil profits. "We've tried it before. It was a failed policy," said O’Reilly. "Congress went back to look at the impact of the windfall profit tax of the early '80s. And it found that we became even more dependent on foreign oil because it reduced domestic investment."
To read Bariromo’s entire interview with O’Reilly, click here.