Chevron CEO sees smoke and mirrors in cap and trade

May 7, 2009

“If you liked credit derivatives swaps, you’re going to love cap-and-trade.”

One can presume that Chevron Chief Executive David O’Reilly is not a fan of the current deep worldwide recession — which was worsened by a credit-market lockup blamed in part on hard-to-value securities.

And, he made it very clear on Thursday that he is not enamored of the system the Obama administration hopes to use to reduce U.S. emissions of greenhouse gases including carbon dioxide, which are produced through the burning of fossil fuels sold by the No. 2 U.S. oil and gas company.

“It’s smoke and mirrors,” O’Reilly told a Boston business group. “Personally, I think it’s going to be a difficult system. I don’t think the American people trust it.”

A proposal working its way through the U.S. Congress would put in a place a cap-and-trade system that would give individual U.S. companies the right to emit certain quantities of greenhouse gases, which contribute to global climate change. Companies whose emissions are below their allotment could sell their extra rights to other companies.

The Obama administration in its budget proposal released on Thursday called for the initial emissions permits to be sold, rather than given away free. That would give businesses a financial incentive to reduce their emissions.

O’Reilly argued that an easier way to reduce emissions would be to raise taxes paid on gasoline for cars. He said Washington has embraced cap-and-trade to avoid the appearance of raising taxes.

“Politicians like it because they don’t like to talk about taxes,” O’Reilly said.

One comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see

politicians – especially this new group – love nothing more than talking about taxes, except raising them. how any of this nonsense addresses vanity-stoking gas-guzzlers and a need for thoroughly overhauling mass transit escapes me. individuals also need to rein-in fuel consumption, and tax incentives for doing so would be a welcomed change to the stick-heavy policies of washington and the states

Posted by jd | Report as abusive