U.S. needs wind, solar power-and oil and natural gas

By John S. Watson

I've been in the energy industry for some thirty years now. And that experience tells me that the long-term stability and success of America's economy will depend, as much as anything else, on affordable energy.

Every enterprise represented by the U.S. Chamber of Commerce depends on a reliable supply of energy at an affordable cost. We're talking about a prime mover behind sustained growth in employment, productivity, and wealth. Take that away or even throw it into doubt, and in short order, we'd all be on pretty shaky ground.

Right now, energy prices are rising, but they are still a good deal lower than 2008, mainly because of the fall-off in economic activity around the world. But it wasn't so long ago that gasoline was above $4 a gallon, and oil traded over $140 a barrel.

Certainly in Washington, D.C., everybody was talking about it. Congress was calling hearings, and the word "crisis" filled the air. But time passed, and the issue dropped from view. It's been like that since the 1970s: When prices decline, there's always the tendency to pay less mind to long-term energy concerns.

In my business, we don't have that luxury. We have to think decades ahead and stay focused on the fundamentals. The men and women who set policy for our country will have to do the same-because as the economy revives, as it is doing today, and prices rise with demand, we'll be in the same fix we were in a year or so ago.

Unless we take the long view and act on it, the U.S. will be struggling again with the same serious challenges.

Over 80 percent of the global economy is powered by oil, natural gas, and coal. And this reliance on traditional fuels is just as great here in the United States, despite all the progress we've made on renewables and other alternatives.

Renewable energy sources are being developed at a very impressive rate. Over time, we will replace some fossil fuels with cleaner, more diverse, and more secure forms of energy. Smart policy can accelerate the development of new and diverse energy sources and the technology to make them feasible. That is all to the good.

Yet, if we look at the data, there is no avoiding a simple conclusion: The sheer scale of our energy needs is far beyond the capacity of any one source or technology.

If you believe that renewables have strong promise for the future, I'm with you. In the long sweep of time, they are going to meet a bigger and bigger share of global demand. But it's false to assume that renewables can replace conventional energy in the near term, as we are sometimes asked to believe.

Most experts predict that 20 years from now, renewables will meet about 20 percent of energy needs. Therefore, we will need to rely on traditional fuels for quite some time to come.

After all, the development and application of new technology tends to be a long-term proposition. Look at the computer industry. It took about 50 years from the development of the silicon chip before computers became a widespread part of everyday life. Will energy alternatives take that long? I hope not. But we need to be realistic.

Even as we move aggressively to bring other sources online, conventional energy will remain indispensible to meeting demand for decades to come. It's for us to decide where we obtain that conventional energy, in the amounts we're going to need.

The solutions to our energy problems are rarely a case of either/or. It's not a choice between more drilling or more efficiency, coal or wind, nuclear or solar. We need greater efficiency and more renewables. We need nuclear and clean coal. We need wind and oil and natural gas. To achieve energy security, we need it all.

That means getting beyond simplistic proposals and staying focused on energy security. There are no quick or easy answers.
Massive scale, long lead times, growing demand-these are the realities we face. And don't doubt for a moment that America has the means and the know-how to manage all these challenges.

America is not only the No. 1 producer of ethanol and wind power. We're first in nuclear energy as well. We're the No. 2 producer of coal and natural gas. And we're the world's third-largest oil producer.

It's clear that we are energy-rich, and our capacity is enormous.

This country is not an energy weakling, or anything close to it. We are an energy powerhouse. We've got what it takes to keep moving forward on every front. And that is what we must do if we're going to be ready for the increase in demand that will come along when the global economy recovers.

For the Record is an edited transcript of a speech by John S. Watson, Chairman and Chief Executive Officer of Chevron Corporation, to the U.S. Chamber of Commerce in Washington, D.C. in October 2009.

March/April 2010