QuestionerThis question comes from Andrew Dixon in the UK. He says, my question is in relation to the oil and gas business and your purchase of Chevron stock. When being asked a question on tobacco stocks in 1997, you mentioned that individuals and companies occasionally have to draw moral lines about what they're willing to do. You stated at the time that you were not comfortable in making a big commitment in tobacco stocks and that you were uncomfortable about their prospects. Charlie has also referenced passing up on a private tobacco deal that you both knew was a sense, yet you both have not. no regrets and saying no to the transaction. I'm not suggesting that the oil and gas business has the same no negative externalities as cigarettes. They do not. With tobacco, the cause and effect relationship between the products and cancer is direct, obvious, and measurable. With hydrocarbons, the societal costs and benefits are far more complex to evaluate. However, an increasing portion of society is drawing their lines in such a way that their painting does not include hydrocarbons, period. My question is, has the alarmism from the climate community, now become pervasive across society to the extent it has become irrational. Have we built our own unrealistic consensus on the pace of change achievable with regards to the transition to greener energy sources to the extent that this is becoming an overly expensive tax worn by the current younger generation? Can we gather from your purchase of Chevron stock that you do not believe the howling from society? Regulators and politician will impair the prospects of hydrocarbons and Chevron, for that matter, in the next 10 years? Can investors still assume an oil? and gas business that finds and produces oil at low cost per barrel can generate a sufficient return on capital for a long time to come?
WarrenWell, I'll give you a 10-word answer to that. The, you know, I can't remember all the questions there were there, but I would say that people that are on the extremes of both sides are a little nuts. I would hate to have all hydrocarbons banned in three years or, you know, you wouldn't want world. It wouldn't work. And on the other hand, you know, what's happening will be adapted to over time, just as we've adapted them to all kinds of things. I do not think, I'm interested that I was a quote from 1997 because, you know, we've talked about this before. We have
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Warrenno problem owning Costco or Walmart, you know, and a substantial number of their stores. And, you know, they sell cigarettes. It's a big item. You know, it's something that brings people in. They know the price of cigarettes and they put them up front. So we don't, it's a very tough situation. We made that decision a long time ago when we went to Memphis and we looked at a business that was a very, very good business and it was much less harmful, at least from everything I could find out, it was much less harmful than smoking tobacco, chewing tobacco was. And these were decent people and they were running illegal business and they all chewed tobacco and themselves. And they told me that their mother was a hundred in chewing tobacco, all these things. But Charlie and I did go down in the lobby of that hotel, and we just said to ourselves, this is probably the best business we've ever seen. And I called my then-son-in-law, Alan Rieberg. And he studied chewing tobacco on its effects when he was working for a NATO-related organization. And we decided not to do it. But, you know, would we, you know, I see. I used to see ads in our paper from financial companies where I knew they were terrible, you know. It's a very tough thing to decide whether you get in or out of a business. It's a very tough time to decide what companies benefit society more than others. I mean, it's, I don't know whether I think Chevron's benefited society in all kinds of ways, and I think it continues to do so, and I think we're going to eat a lot of hydrocarbons for a long time, and we'll be very glad we've got them. But I do think that the world's moving away from them, too. and that could change. I don't like making the moral judgments on stocks in terms of actually running the businesses. But there's something about every business that you know what you wouldn't like. And, you know, meatpackers or anything. Have you ever gone through a meatpacking? You know, if you expect perfection, you know, in your spouse or in your friend, or in companies, you're not going to find it. And what you elect to do yourself, if you own an index fund, you're going to own Chevron. And blame me, Chevron, it's not an evil company in the least. And I have no compunction about owning, in the least about owning Chevron. And if we own the entire business, I would not feel uncomfortable about being in that business.
CharlieWell, I agree. I agree. You know, you can imagine two things. A young man marries into your family. He's a English professor at, say, Swarthmore, or he's a, he works for Chevron. Which would you pick? Because I don't see. I want to admit I'd take the guy from Chevron.
WarrenWell, I hope your daughters agree with you.