Chevron CEO John Watson gave a speech on Tuesday to the Economic Club of Minnesota, and while I was able to drop in to hear it, I didn't get a chance to write a story.

I recorded the speech, however, and two question and answer sessions – one where Watson took audience questions, and then another where he briefly took reporter questions after the lunch.

He covered a lot of ground -- addressing political crises in Russia and the Middle East, arguing for more natural gas pipelines, and giving general thoughts about the future of oil prices. He slammed California's cap and trade scheme, explained why Chevron does not have a commercial biofuels plant, and argued that the U.S. should allow crude oil exports.

I've transcribed most of the questions and answers here. They're not in perfect chronological order, the better to group similar questions together.

I have noted which questions came from the audience, and which from reporters. The only question I asked was the one about what Chevron can do to help curb greenhouse gas emissions.

(Audience) How are you navigating the growing conflict with Russia?

"One of the benefits of being an American company is we do everything we can to not be political. Chevron gets business around the world, I'm sure many of the companies here get their business because when we go into countries around the world, they know that we're commercial-based. And we are going to, in my business, try to develop the resources and not be political. I work really hard to stay out of the politics of these individual issues. My general view on the subject is that sanctions as a blunt policy tool are pretty difficult to put into place. If you look around the world, Chevron has been subject to sanctions in Myanmar, South Africa, Angola and others. It's very difficult, unless you get everyone to participate. With U.S. companies becoming more and more international, and the world becoming more and more integrated, sanctions are very difficult to put in place. My expectations are that Russia will continue to be a major oil producer. The sanctions that have been put in place recently may impact future developments, but these developments take a great deal of time."

(Audience) Can you comment on the policy implications of the rise of the Islamic State and instability in North Africa and Nigeria?

"Certainly there is instability throughout the Middle East, North Africa and including portions of northern Nigeria. The effect on the ground of course is very difficult and heart-rending for the people involved. It's significant. People displaced. The impacts that are being felt on the business will in time also be significant. It's hard to get drilling engineers and geologists and the talent to go to places that have these kinds of instabilities. While some oil will continue to be produced in some of the hottest areas, I think over time you'll see investment slow and production decline. Now, there's enormous potential in the Middle East, particularly in Iraq. My company has a presence in Kurdistan, and we evacuated our expatriots, who will return in due course when it is safe to do so. We also have significant business in Nigeria. Most of the conflict you described is in the north (of Nigeria). The oil-producing region is to the south. But all of these trends where government is overwhelmed and society becomes dysfunctional, I don't think they're good for consumers, they're not good for people, and they're not good for developing energy resources where that's possible."

(Audience) Just wanted a little bit more on the infrastructure. We've seen some flows in the pipelines reversing. Also, where are we anywise? What do we need to do to continue to build out to where we should be? And then also a little bit on the rail and trucking side as well?

"There's a great deal of effort that's needed locally in the area of gathering lines and major trunk lines. The Keystone pipeline is the most visible example, but Canada has infrastructure requirements that they need to put in place by going east to west. We have issues with natural gas. Think about it this way. We're shutting down nuclear plants in the Northeast. We're shutting down coal-fired plants in the Northeast. Where is the energy going to come from? It's going to come from natural gas that needs to be imported to the area. How's it going to move to the area? We have to have pipelines. And you better have capacity that will be sufficient both at the wellhead and in the pipelines to meet seasonality requirements...The industry has to do its part, whether it's the joint work that's being done with the rail industry on safety, of moving products out of Bakken and elsewhere in this country. We need to keep the trains on the tracks, and over time need to upgrade the rail cars that are being used. We have to have good assurances in place, particularly some of the aging pipelines."

(Reporter) Do you have any specific concerns about pipelines in Minnesota?

"I don't have a specific concern to Minnesota. My comment about the need to progress pipeline and transmission line infrastructure is really meant as a broader policy issue, that pipelines are a very safe way to move oil and natural gas, and we need to permit these lines, and we need to do reasonable studies of any environmental risks, and then get on with it. That's my view."

(Audience) You mentioned that in the year 2035, renewable energy would be potentially 25 percent (of energy). Is there anything that your company, Chevron, is doing to research specific renewable energy sources, or are you guys mostly based in oil?

"Well certainly our predominant business is oil and gas but we're actually the largest renewables producer amongst the major oil companies, and that's largely due to our geothermal business in Indonesia and the Philippines. We have spent quite a bit of money on advanced biofuels, and this is really difficult. Advanced biofuels isn't just the conversion technology and it isn't just feedstocks.* There's an economic equation of getting the feedstocks, connecting the source with the plants and with the markets. We have not built advanced biofuels plants, but we continue to be active in the research area. We don't manufacture solar panels or wind turbines, that's not our business, but we use them in our business. For example, we have a large solar-to-steam pilot that we're working in the San Joaquin Valley in California…If you can generate steam from solar economically, it potentially displaces a valuable energy you burn to generate that steam. We have a host of things we're doing in that space, and energy conservation is of course a preoccupation of ours. Energy costs are significant for us as well."

*"feedstocks" is a generic term for any kind of raw material used to make a fuel

(Reporter) Has any of Chevron's research into renewable fuels seemed particularly promising?

"I wouldn't isolate on one…One of the points I was trying to make is that we shouldn't try to pick those winners and losers, because I don't know which of those fuels or which of the feedstocks or which of the conversion technologies will necessarily work. We've tried a number of them in the lab and tried a number of them at small scale. We haven't chosen to build a commercial plant, because we haven't been able to put the economic system together."

(Reporter) You mentioned three objectives for good energy policy, one being preserving the environment. Where does curbing greenhouse gas emissions fit into that, and what can Chevron do to help?

"I'd preface my comment by saying I'm not aware of a company that has done more than my company. It's worth noting that, because I do understand the concerns that are out there, I understand the risks of climate change. My company has the largest carbon storage project in the world in Australia. We and our partners are spending $2 billion. We're a part of a carbon sequestration project in Canada. These are among the very largest in the world. We're the largest renewables producer, thanks to our geothermal business. So I understand the concerns that are out there. The comments that I would make more broadly on the subject are, here in the United States, we're fortunate. Because of the boom in shale gas, it is naturally displacing coal. Here we have a circumstance where the U.S. is reducing its greenhouse gas emissions without significant intervention in the markets. There's been a great deal of conversation about a carbon tax, or other vehicles, cap and trade. We have one in California. If you think about pollution markets in general, they've been effective when you've had a local pollution to deal with, and all emitters could be included. The U.S. is 16 percent of the world's greenhouse gas emissions, and falling. It's estimated that without much change we'll be at 13 percent. And we have one of the most efficient companies in the world. So then the question becomes, why do you want to impose additional costs on our businesses? One, it would have economic impacts. But two, and importantly, businesses will choose to locate elsewhere, conceivably in jurisdictions that don't have the energy practices that we have here. So in a perverse way you could increase greenhouse gas emissions. California has one of the most onerous cap and trade laws that's coming into effect. California is less than 1 percent of the world's greenhouse gas emissions. Any business with any energy intensity about it will think twice before investing in California, and companies that are already there are very efficient. So do you want to encourage or discourage economic activity in jurisdictions? You need global engagement on those mechanisms for them to be effective, in my opinion."

(Audience) I'm interested in your projections for oil prices, because there has been downward pressure, and what would be the effect of changing oil prices on our economy?

"Oil prices have been drifting down a little, they're now a little bit under $100 a barrel. Short-term forecasts of oil prices is not something that I'm going to have, because it's very difficult. My general view is that oil markets are pretty well supplied today. On the other hand, there's relatively little true surplus capacity. The only country that has voluntary spare capacity now is Saudi Arabia. There's some capacity that's been off line because of some of the civil strife around the world. One thing that I often mention to those that are interested in our business is that unlike the typical manufacturer, where you build a plant and then it's online forever and that capacity doesn't go away, in our business there's this thing called the decline curve, and so it requires perpetual reinvestment. Some oilfields have long, slow declines. Some, like those in the unconventional business, the shales, have very rapid decline. And so you do need to keep investing in the business. If you get out of balance, where now we have oil coming back on line from Lybia, and you see prices drift down, over time, given the high costs of our business, I think enormous amounts of investment are going to continue to need to be made to meet demand, and the break even cost for most supplies is in many cases $100 and higher. Some it's lower, but over time, I think you're going to see prices stay at or near the level they are, or potentially higher…We make our bets using a family of estimates around prices. We do probabilistic analyses, and it's a very tough area, but our investments are made over a period of decades."

(Reporter) How do state permitting processes compare generally to the federal permitting process?

"It varies greatly. For example in California, with the California Environmental Quality Act, we've had a project to simply modernize our refinery in Richmond. We got the necessary approvals. The court shut us down after a lawsuit. We're almost 10 years in, and we haven't upgraded the plants. So California is a particularly difficult state. Others are better, so it depends greatly on state policy."

(Reporter) Could you talk a little bit about Thursday in Scotland (the independence vote)?

"One of the things I commented on in the room is that I stay out of politics as best I can."

(Reporter) But you've got a lot of money invested there.

"We do. But we've seen where countries and states have chosen change, and we work to get along with the government in power. That's a choice for the Scottish people and the people of the UK. Chevron, we're about the tenth-largest oil and gas producer in the UK, and we do have a nice business there, but we'll work to be constructive with whoever is in office."

(Audience) What do you see as the prospect, moving forward, of the U.S. exporting crude oil?

"This is one of the issues that should be allowed on inspection. It doesn't need a lot of discussion when you think about it. Right now, we can export oil products – gasoline, diesel fuel and jet fuel. What you consume can be exported. You don't consume crude oil. It's just an ingredient in the products. We can put more oil on world markets if we don't artificially constrain U.S. exports of oil. To me it's a very straightforward argument that we should allow oil to be exported from our country. As a practical matter, the imbalance we have in the United States is that we're producing more light oil, which doesn't fit our refineries very well. So the idea would be to export lighter oil that is being produced out of the shales and import heavier oil to fill out our refineries. It's more of an economic efficiency argument. We have some big projects underway to export natural gas from the Gulf Coast of the U.S. We're surplus natural gas in this country, and I think the U.S. can do a great service to the world's economy by exporting natural gas to help the economies of Europe and Asia develop and have access to cheaper sources of energy than they would otherwise have. So I'm bullish on both, just as I favor exporting farm products and a variety of other goods."

(Reporter) Do you see the export ban being lifted entirely any time soon or do you see it being chipped away significantly, and if so what do you think that would do to the pace of development here in the U.S., particularly North Dakota?

"The oil industry is very resourceful at finding ways within the law to move product. We've seen how resourceful they've been in using rail over time. Within existing law, whether it's exporting to Canada or with partial refining of feedstocks so the products qualify for export, I think the industry will find a way to move oil to foreign markets. There is some flexibility within existing laws, but it should be much more straightforward. This is one of those issues that doesn't need study. It should be done on inspection, and the reasons are very straightforward, and I'll give you three: 1) Because we believe in free trade, we want countries around the world to make their resources available to us. If we don't make our resources available to them, we don't set a very good example. That's more philosophical. 2) From a consumer's point of view, refiners can export products today. You can export gasoline today. You don't consume crude oil, so by artificially restricting movement of crude oil, it might keep domestic crude oil prices down, but that value will accrue to the refiner not the consumer. 3) Over time, it's in all consumers' interests to produce more oil. If you artificially restrict movement of crude oil and prices were to fall further in the U.S., there's less incentive to produce more oil. That puts less oil on world markets, and other things being equal, tends to push prices up. So it's a very straightforward economic argument that doesn't require debate in my view."

Here also are a couple of snippets from Watson's speech, which he gave from a prepared text:

Thoughts on Germany, which was lauded a week ago in the NY Times for its pioneering initiatives in solar and wind

"Say Western Europe, where many countries have implemented policies focused on forcing expensive wind and solar into the system. Because of these regulations, electricity prices in Denmark and Germany have jumped dramatically, affecting both businesses and consumers. Consumer electricity prices are basically triple what the U.S. is now. The German economy minister says the renewable energy law could lead to the deindustrialization of Germany."

Not a fan of renewable fuel standards

"I like farmers. In fact, I like farmers a lot. But what I'm going to ask you, is it really good energy policy and land use policy to have 40 percent of one crop effectively mandated for fuel use? Is it really sensible to mandate the use of advanced biofuels that don't exist at economic or earning scale, and then charge penalties for being not able to deliver them? Is it really wise to dictate the nation's gasoline composition by annual regulator discretion?"