Last summer Chevron gave notice to California that it would move its headquarters to Texas, but the fallout has potentially worse implications for the Golden State’s 27 million drivers.
The oil giant, which has been based in California for over 140 years, revealed in August that it would relocate its headquarters
However, Chevron is now reportedly weighing up ceasing all production in the state, the Wall Street Journal reported.
If Chevron follows through, it could close two of California’s largest oil refineries – potentially driving gas prices even higher as it cuts supply there.
The Golden State already have consistently higher gas prices than any state but Hawaii.
The company’s decision will depend on whether California introduces any further environmental or other regulations, Andy Walz of Chevron told the Journal.
California has strict fuel-quality rules which were imposed to limit harmful emissions and curb environmental damage.
According to oil industry analysts, such regulations make it more expensive to produce oil in California, compared to other states.
Chevron has two of California’s largest oil refineries
‘Why deal with California when you could go to Texas or New Mexico? You only have so much capital and so much time in the day,’ Andy Lipow, president of Lipow Oil Associates in Houston, told the Journal.
‘Given the regulatory environment in California, I would be investing outside the state.’
The latest bill to be proposed on the matter was introduced on January 27 by Democratic state Senator Scott Wiener.
If passed the law would allow insurance companies and homeowners to hold oil and gas companies liable for climate-related disasters such as wildfires.
California is still recovering from the deadly wildfires that destroyed large swathes of Los Angeles.
The state is also in the grip of an insurance crisis as large insurers are refusing to issue new policies or renew others that are at increased risk due to the rise of climate-related disasters.
Chevron refineries account for a third of the state’s gasoline-production capacity.
Its fuel-making plants are a century old and encompass nearly 4,000 acres in Northern and Southern California.
Governor Gavin Newsom’s relationship with Chevron soured over environmental regulations
The Golden State already have consistently higher gas prices than any state but Hawaii
Selling the facilities could prove tricky given the rising environmental liabilities and a shrinking pool of buyers, according to the Journal.
‘We used to have competitors. They’re gone,’ Walz, who runs Chevron’s refining, pipeline and chemical businesses, told the publication.
Demand for gasoline is also shrinking, down 10 percent in California since 2019, as more residents work from home and EV sales increase.
The state has a ban on the sale of gasoline-powered cars after 2035 and EVs now represent more than a quarter of new car sales in California.
In 1983 California had 40 operating refineries but the number has fallen to just 14 as of last year, according to the Energy Information Administration.
The softening demand has led to less oil exploration in the state, which imported more than 75 percent of its oil in 2023.
Chevron is not the only company leaving California, it follows Elon Musk’s SpaceX, Oracle and Hewlett Packard that have all relocated to Texas.
This article was originally published by a www.dailymail.co.uk . Read the Original article here. .