On the eve of oil price cuts last week that sent shock waves through the industry, Clifton C. Garvin Jr., chairman and chief executive officer of Exxon Corp., discussed prices, the demand for energy and other industry issues with staff writer David A. Vise.

Garvin's career at Exxon began 37 years ago in a Baton Rouge, La., refinery where he served as a process engineer.

Exxon, with approximately $63 billion in assets and more than 150,000 employes, was the nation's largest corporation in terms of revenue last year, with $94.7 billion, and $5.0 billion in net income. Exxon sold about 4.1 million barrels of oil a day last year.

Q. What is your outlook for oil prices?

A. It's for a decline . . . in real terms, by the amount of inflation.

. . . I'm not one of these people who subscribes to the notion that the price of oil is going to plummet to $12 a barrel or $15 a barrel. We have a range for 1990 to 1995, and the middle of that range for 1990 is between $30 and $33. (Some crude prices fell below $29 a barrel last week.)

Q. There have been a lot of big oil mergers recently, Texaco-Getty, Socal-Gulf and Mobil-Superior. Where was Exxon?

A. We at Exxon have not participated in the mergers , but we've looked at each one of them and gotten out of the bidding because our advice was not consistent with what the potential sellers finally got for the properties. I'm talking about Getty and Gulf and things like that.

Q. One of your competitors has suggested that Exxon has not participated in big oil mergers because you didn't believe you could get approval to make mergers of that size from the Federal Trade Commission and Justice Department. Have you seriously considered these big deals?

A. We've looked at them. . . . There could be a possible problem making a large acquisition on the West Coast . . . . And Exxon has a rather substantial reserve position in Alaska. But even there I think that we could do it.

There are problems with these big mergers, but the things that have bothered me don't seem to bother my competitors. They know going in that they've got to dispose of some of their operations to get government approval , and yet they're going to pay a premium price. I suspect they'll never get that premium price back.

Q. You're speaking about the premium prices they have paid when they made these acquisitions?

A. When they made the acquisitions.

Q. But your competitors say they're paying less to get oil reserves through merger than they would have paid to find new oil reserves.

A. I know they are, but unless you've got access to the reservoir data and access to the tax-base information . . . you really can't tell.

I'm not going to say if my competitors made bad deals or not.

Q. Haven't your competitors significantly weakened their balance sheets by adding billions in new debt to finance these mergers?

A. They've got a lot of debt, I think, in the short term. How long it will last I don't know.

Q. Exxon stock has risen from the mid-30s to the mid-40s during the last year. Why has the stock market's perception of the company changed?

A. Well, one of the things that I think we've made clear to the people who follow us is that we've recognized that the demand for oil is not going to increase by more than a percent a year. . . . And so we have taken some pretty strenuous steps, shutdowns, write-offs; we shut some seven or eight refineries in our system, mostly in Europe. . . . They're just hard facts.

In the last two and a half years, we've reduced our work force in all of our operations, not just oil and gas, but chemicals and some other new activities. We have 25,000 people less than two and a half years ago, and we have reduced considerably our cost of doing business.

Q. Specifically, what is Exxon's commitment to exploration?

A. In the last five years, we've been in a cycle of more success in exploration, and we've made sure that people know that. . . . In the last eight years, we've probably doubled what we spend, which on average is $2 billion to $2.5 billion a year in current dollars, excluding development drilling and all of the production activities. This is another reason for the changed perception of Exxon, to go back to your earlier question.

Q. Will the Exxon of the 1990s look radically different than the Exxon of today?

A. No, it won't. We're probably 95 percent energy today, and we'll still be 95 percent energy.

Q. Does that mean the other areas Exxon is getting into, Exxon Office Systems for example, are not going to be a big part of your business?

A. Even if they get to be successful, the oil business per se is a $90 billion business in terms of revenue. . . . So even with success outside energy , I guess I don't think it's radically going to change the whole.

Q. As the chief executive, what will you emphasize to make Exxon more competitive and profitable?

A. No. 1 has and will continue to be an emphasis on successful exploration. Second, of course, is to continue to be the most efficient operator in the petroleum sector.

In chemicals we have a damned efficient operator, an $8 billion company in its own right, but as with all petrochemicals, it's cyclical. I don't argue that point. But over the years it has moved further away from what I call the basic commodities and into specialty chemicals and done well. I feel very good about that chemical company, and it has good management.

We pretty well have phased out of the nuclear business. One of our most successful investments is in InteCom, the telephone exchange business we funded, and they've gone public twice. They are very successful. I think that we've realized $40 million or $50 million of profits, and we have stock in the company today, 30 percent, that's still worth $100 million. This thing has done well.

We're in the minerals business Exxon Minerals with some world-class properties, but that is in kind of a holding action. We're looking for cheaper ways to try to develop them.

We've had less success in things like office systems, and I just don't know where that's going. That's one of our problems.

Q. Regardless of who wins the election in November, when Congress looks at ways to cut the deficit by increasing revenue, one of the obvious targets is the oil industry. Are you and your colleagues concerned?

A. Yes, all of us have a concern. If the Congress finally decides in its wisdom that it's going to seek more revenue . . . they'll leave the consumer alone if they can. The oil industry is always fair game.

They've always got propositions saying, "Put a tax on imported oil," and we've been able to get them to understand why that doesn't make sense. So, they've always backed away from it. But that isn't to say that they are not going to come back again. That is always a worry with us.

Q.To understand Exxon and the oil industry, what else is important?

A. There is a perception in the country today -- and we see it in the operations of the Congress, and in the manner in which well-meaning environmental groups and conservation groups react -- that energy is no longer an issue, no longer a problem in supply. We are not finding as much oil and gas as we consume.