The war between Gov. Gavin Newsom and the state’s once-immense oil industry entered a new phase a few days ago when Chevron, California’s oldest and best known producer of gasoline and other petroleum products, announced it was moving its corporate headquarters to Texas.
Chevron, which dates its origins to the California Star Oil Works, which struck oil in the Santa Susana Mountains of Southern California in 1876, characterized the move from San Ramon to Houston as merely an ordinary managerial consolidation.
However, given its prominence, Newsom’s recurrent vilification of the industry and his vow to end sales of gasoline-powered cars as a way of becoming carbon-neutral by 2045, the move’s political aspects could not be ignored.
Initially, Newsom posted on social media a video denouncing oil industry “price gouging,” including a melty-face emoji characterizing the industry’s reaction to California’s efforts to dampen gas prices.
But his office quickly took down the video and issued a statement saying Chevron’s announcement “is the logical culmination of a long process that has repeatedly been foreshadowed by Chevron.”
Predictably, Texas’ Republican Gov. Greg Abbott, a frequent foil for Newsom, immediately cast Chevron’s move as a “snub” to California in a posting on X, formerly Twitter, calling Texas Chevron’s “true home.”
A more stinging rebuke came from the Bay Area Council, a business group that hews to a moderate political line and has often been supportive of Newsom.
“Chasing jobs and employers out of California is no way to run the economy,” Jim Wunderman, the organization’s president, said. “It’s an embarrassment for California that we’ve lost so many global companies because of misguided policies that make it incredibly difficult to do business here. California’s elected leaders need to take stock of the decisions they’re making that affect millions of families and workers, impact the state budget and have grave consequences for the future economic health of this state.”
Were Chevron’s move an isolated event, it would be only temporarily interesting. However, California has seen a steady exodus of corporations, as the Bay Area Council noted, thus reinforcing its image of hostility to business.
Just days earlier, Elon Musk, who had already moved his Tesla corporate headquarters to Texas, announced that X and SpaceX would follow.
Chevron’s announcement also comes amid a flurry of layoffs and corporate retrenchments in the Bay Area’s high-tech industry, which have contributed to the state’s having the nation’s highest unemployment rate.
Moreover, we may not have heard the last of Chevron’s moves. The company had been warning California officials that it might close its two refineries in the state, which are major producers of the state’s unique gasoline blend.
Voters in Richmond, the site of one Chevron refinery, will decide in November whether to impose a special tax on the refinery, $1 per barrel, and the company has accused Richmond’s leaders of “playing chicken” with their largest taxpayer and employer.
Politico reported that Andy Walz, a top Chevron executive, warned in an interview about the potential consequences of the Richmond tax measure. “I’m not going to tell you that that’s the death knell, but we’re getting close,” he said, adding, “if I can’t invest there, and I can’t get a return, we will move on.”
Newsom and other California politicians openly intend to eventually shut down the oil industry to reduce the state’s carbon footprint. But they want a gradual reduction so many millions of gasoline-powered cars still on the road can run until phased out.
Were Chevron and other producers to decide, as Walz warns, that continuing operations in a politically hostile California no longer pencils out, the state could see an abrupt and economically devastating fuel shortage.