Chevron CEO John Watson on oil prices: “This is a tough year”

Chevron's CEO John Watson matter-of-factly said that 2015 will be a tough year for the oil industry. Watson is confident however that prices will pick up by 2016.

BIG SHAKEOUT

Sitting down for an interview with Business Insider's Henry Blodget, Chevron CEO John Watson says he expects this year to be a bad time for the oil industry. As oil drilling activities have decreased, 2015 will certainly be a rough time. He explains that with the present costs and price relationships, big projects are placed on hold.

"I'll just say that the forces are at work now both on the cost side and on the price side to come into a better equilibrium," he added.

Watson maintains optimism though that prices will recover next year.

"Once that momentum works through the system and the spending effects start to be felt, you'll see prices recover," he said.

STABLE & UNSTABLE

Watson is also confident of America's independence when it comes to energy production, making USA the number one producer of oil and gas, with Russia and Saudi Arabia trailing behind. He cited the benefits of a movement in oil prices. When prices are high, industry players tend to invest a lot and there is enough employment. When prices go low, consumers naturally take advantage of it. Watson believes America should just use its competitive advantage and be consistent with its policies to maintain this.

Chevron is into the exploration, production and transportation of energy products such as natural gas and crude oil, transportation fuels and lubricants, as well as petrochemical products.

On Monday, the price of crude oil plunged below $65 per barrel as the dollar strengthened. According to a report, the price of Brent crude oil is $64.75 per barrel, falling to 62 cents from its last price. US crude oil decreased to 46 cents with $59.26 a barrel.