(Bloomberg) -- Chevron Corp., based in California since the days of kerosene lamps, is moving headquarters to Texas after years of fighting Golden State officials over strict environmental policies and costly regulations.
The move announced Friday will end the company’s 145 years of being based in the most populous US state. The shift prompted Texas Governor Greg Abbott to welcome Chevron to its “true home,” while a spokesperson for his California counterpart Gavin Newsom dismissed it as a “logical culmination” of a years-long transition by the oil giant.
Chevron already had slashed new investments in California refining, citing “adversarial” government policies in a state that has some of the most stringent environmental rules in the US. In January, refining executive Andy Walz warned that the state was playing a “dangerous game” with climate rules that threatened to spike gasoline prices.
Chief Executive Officer Mike Wirth pushed back on suggestions that the relocation is being driven by politics, saying “it’s really to be closer to the core epicenter of our industry.”
“We’ve had some policy differences with California,” Wirth said during a Bloomberg Television interview. “But this isn’t a move about politics. It’s a move about what’s good for our company to compete and perform.”
The announcement came as Chevron posted disappointing second-quarter results and outlined a shake-up in the senior leadership ranks apparently aimed at improving results.
Texas is home to a vast network of resources key to Chevron’s business, from equipment vendors to universities that it taps for research and recruiting talent, Wirth noted.
“Houston is the energy capital of the world,” he said. “It’s a natural place for companies in our industry to have their home office and headquarters.”
Chevron joins a long list of California emigres that includes Oracle Corp., Hewlett Packard Enterprise Co. and Tesla Inc. While the migration among former Silicon Valley tech giants has been largely driven by tax and and cost-of-living considerations, Chevron has been at loggerheads with state leaders over increasingly tough fossil-fuel rules.
Newsom ran for reelection in 2022 promising to wage war on Big Oil, calling for a special legislative session and asking lawmakers to impose a “price gouging” tax on oil companies. That was later watered down to a task force studying excess profit margins.
“This announcement is the logical culmination of a long process that has repeatedly been foreshadowed by Chevron,” Alex Stack, a spokesperson for the governor, wrote in a statement. “We’re proud of California’s place as the leading creator of clean energy jobs – a critical part of our diverse, innovative, and vibrant economy.”
Wirth has been extolling the virtues of the Lone Star State’s business climate for at least half a decade.
“The policies in California have become pretty restrictive on a lot of business fronts, not just the environment,” he said during a 2019 speech in Houston.
EVs, Renewables
California has long been an incongruent state for an oil company to call home. It pioneered the push to cut tailpipe emissions in the 1960s and has adopted sweeping climate measures including a goal for California to become net zero by 2045, five years ahead of US as a whole.
Frequent droughts and wildfires mean the state is already suffering from catastrophic effects of climate change. California accounts for more than a third of the country’s EV sales. And almost all of America’s renewable diesel, made from vegetable oil and natural fats, is consumed in California.
California once played an important role in the US oil sector but output has been plunging for most of the past four decades while shale-rich states like Texas and New Mexico have seen crude production boom.
“Chasing jobs and employers out of California is no way to run the economy,” said Jim Wunderman, president and CEO of the Bay Area Council, a business group. “It’s an embarrassment.”
Light taxation, business-friendly regulation and a relatively low cost of living made Texas the most desirable destination for companies relocating over the last decade, the Federal Reserve Bank of Dallas said in February. The state saw net migration of 7,232 firms and an addition of nearly 103,000 jobs between 2010 and 2019.
Chevron already has about 7,000 workers in the Houston region, compared to about 2,000 in San Ramon, California.
“We do have a big business footprint in Texas, which is now larger than our business footprint in California,” Wirth said. “For many many years, that was not the case. California was our home, it was our birthplace.”
--With assistance from Ruth Liao, Alix Steel and Mitchell Ferman.
(Adds comment from industry group. An earlier version corrected a description of California in the second paragraph.)
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