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US 2011 Budget Fight Zigzags On

This is a transcript of top stories presented by China's CCTV Business Channel as produced by CNBC Asia Pacific.

A big hello to our viewers across China. I'm Saijal Patel and you're watching "Asia Market Daily".

The possibility of a U.S. government shutdown is looming, as Republicans and Democrats failed to make any headway on a budget deal in Washington overnight.

CNBC's Chief Washington Correspondent John Harwood has more.

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John Harwood, CNBC, Washington DC.

Here in Washington the debate was all about the budget, debt and deficits. But it zigzagged between two different fights. First, House Budget Chairman, Paul Ryan released his budget with $4 trillion in cuts over 10 years. Later President Obama came into the briefing room and tried to settle the disagreement over spending in 2011. He said he'd already compromised with Congressional Republicans and it was time for them to be reasonable.

(SOT) Barack Obama, U.S. President:
We have already hit a figure, that by any standard would be historic in terms of cuts, and what we can't do is have a my way or the highway approach to this problem. We can't have a my way or the highway approach to this problem because if we start applying that approach, where I've got to get 110 percent of everything I want or else I'm going to shutdown the government, we're not going to get anything done this way. And the American people are going to be the ones who suffer.

For his part House Speaker John Boehner was facing pressure from Tea Party Republicans. He said he wanted to make sure the cuts proposed by democrats were real.

(SOT) John Boehner, U.S. Speaker of the House:
We had a good discussion at the White House earlier today. There was no agreement reached. And so those conversations will continue. We've made clear that we're fighting for the largest spending cuts possible. We're talking about real spending cuts here. No smoke and mirrors.

Despite all the rhetoric the two sides are inching closer. Boehner and Senate Democratic Leader Harry Reid had a productive meeting after both the President and Boehner spoke publicly. Chances remain good that that 2011 budget fight is going to get settled. The longer term fight, over chairman Ryan's plan to cut Medicare, Medicaid, and other different entitlement programs. That's going to be a lot tougher. Back to you.

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Elsewhere, the recent surge in crude prices has been a boon for oil giants - and that's been pushing up their share prices.

In a CNBC Exclusive interview, Maria Bartiromo spoke with the head of Chevron, asking where future growth would come from.

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John Watson, Chairman & CEO, Chevron:
We are spending almost 90 percent of our capital dollars on the upstream which is exploring and producing oil and gas. So that's where we'll be emphasizing our growth. And we have 500,000 barrels a day of growth to add to what we already have over the next five to seven years. So that's what we'll be focusing in on and executing against. We also have an improving and refining marketing business. It won't draw as much capital as the upstream of the business, but that business is improving, and improving significantly.

Maria Bartiromo, CNBC:
A lot of companies are wondering if, in fact, you should be using that cash to make a big acquisition. We know Exxon Mobil acquired XTO in natural gas. You did a small deal recently. Is that a prelude to a bigger deal to come for Chevron?

John Watson:
Well we're fortunate. We are investing our earnings and cash flow. We have a capital expenditure program this year of some $26 billion, which is up 20 percent from last year and exceeds the $19 billion in earnings. So we are investing. In terms of acquisitions, we're in an enviable position of not having to do an acquisition to ensure growth going forward. We have a growth profile that's very attractive, and that's what investors are seeing going forward, and we've also been growing volume while growing margins at the same time.

Maria Bartiromo:
Do you think based on the supply and demand dynamic that oil is justified at the prices we're looking at?

John Watson:
I think there are many factors that are contributing to high oil prices today, Maria. One is a recovering economy where demand is growing. And the other is policies around the world that aren't necessarily expanding supply necessary to keep up with that demand. So surplus capacity is shrinking and prices rising. We also have the pressure of uncertainty going forward given the events we've seen particularly in the Middle East.

Maria Bartiromo:
Let me ask you about natural gas, of course, which is an area that your company has focused on, and we've been talking a lot about this differential that we're seeing. Prices for natural gas trading at a 75 percent discount to crude. Why do you think we are seeing these two markets trade so differently?

John Watson:
We've seen one of the great technical advances in the energy business in the last 20 years take place with the identification of hydraulic fracturing and the application to shale gas in the United States, and so we're seeing abundant supplies in the United States. It's a great opportunity for the American people to take advantage of a domestic source of energy, and that is really what's driving the difference. Gas markets tend to be more local in nature and we have surplus supply coming out of a weak economic time when demand was low, and so we're seeing low prices, and consumers are benefiting.

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That's the latest "Asia Market Daily".

I'm Saijal Patel from CNBC, thanks for joining me.

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