After nearly a century and a half in California, Chevron decided to pack its bags and head southeast to Texas. The multinational energy giant arrived in California long before Hollywood and Silicon Valley took root, but policy and regulatory differences over the past decades pushed the company to a decision that ultimately came to nobody’s surprise.
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Chevron will now make its home in Houston, the energy capital of the US, if not the world. Equipment vendors up and down the oil and gas supply chain are within close proximity, as are preeminent universities that Chevron will no doubt tap for talent and research.
California Governor Gavin Newsom ran for reelection in 2022 with an expressed vow to wage war on Big Oil. Needless to say, Chevron and others were concerned, but Newsom was just the latest in a long line of California politicians who have made the state an uncomfortable fit for oil and gas.
California implemented sweeping measures to cut tailpipe emissions during the 1960s, which fed directly into recent climate policies pushing the state to be net zero by 2045. The cost of doing business for Chevron has become increasingly demanding, and Chevron, Shell, and Exxon Mobil are frequently named in state, climate-related lawsuits. Meanwhile, Texas has long been business-friendly, with light taxation, few regulations, and a comparatively low cost of living. Between 2010 and 2019, Texas registered a net influx of 7,232 companies and the addition of approximately 103,000 jobs.
As the move advances, however, a looming battle with the city of Richmond plays out in the background. The city will decide this fall on a $1-per-barrel refining tax on Chevron’s local refinery. Should the measure pass, Chevron has threatened to shut the refinery, directly impacting California’s oil supply. The expected outcome would undoubtedly be higher gas prices.
Chevron already has roughly 7,000 employees operating in Houston. Texas Governor Greg Abbott was quick to welcome the news and the predictable political jabs between Governor Newsom and Governor Abbott have been playing out over social media. Chevron is the latest in a series of major company exits from California, with Hewlett Packard Enterprise Co., Oracle Corp., and Tesla Inc. also deciding to call it quits in the golden state.
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