Although the Chevron executive said there are big worries about the structural deficits going forward and the tax increases that are coming absent a deal on the fiscal cliff, the oil major is moving forward with its investments.
"We're spending some $32 billion on energy projects around the world," Watson said, and he expects to invest even more next year.
Those investments should lead to a 20 percent increase in Chevron's oil and gas production by 2017, he said. The company's most notable investments are two big natural gas projects in Australia. (Read More: The World's Biggest Oil Reserves.)
In the U.S., if more areas are opened to exploration, "there is an opportunity across public and private lands to create a million jobs a decade in this country," Watson said. "There is opportunity to create trillions of dollars in tax revenue and make us energy self-sufficient."
He also cautioned that imposing punitive taxes on the industry could curtail investment.
Chevron also has $22 billion on its balance sheet that it will continue to invest and return to shareholders through dividends and stock buybacks. "We have plans to continue our strategy of increasing dividends as the pattern of earnings and cash flow permit," Watson said.
Watson is expecting sideways oil prices next year, noting "we could see some ups and downs on developments in the Middle East and expectations around the condition about the economy."