Chevron's Departure: the Self-Ruination of California

Closing Chevron's Richmond refinery will have substantial
negative impact on California's gasoline supply chain.

Last week's announcement by Chevron that it is moving its headquarters from San Ramon (35 miles east of the Peninsula) to Texas comes as no surprise.

IMHO, old-timers in ownership and management had Chevron hanging on in California because of sentimentality over its 145-year history in the State; however, repeated public excoriation of the oil and gas industry and laws that made it increasingly costly to operate took its toll.

When California announced that it wanted Chevron to close down operations 10-25 years in the future--but not yet--there was no reason for it to adhere to California's timetable. [bold added]

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.”

...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.

Progressive politicians who accuse refineries of price gouging should ask themselves why those greedy capitalists are shutting down the refineries and foregoing such a profitable business. Such self-reflection is foreign to the one-party state. In fact, one risible solution promises to dig the hole deeper.

Enter Mr. Newsom’s energy commission, which is charged with investigating the causes of California’s high gas prices. A commission staff report this week failed to find wrongdoing but nonetheless floats state control of the refining industry.

One idea is to “purchase and own refineries in the State to manage the supply and price of gasoline.” At least the commission concedes there are “significant legal issues” to address and “there are complex industrial processes that the State has no experience in managing.” That’s for sure.

Sacramento can’t currently provide basic public services such as reliable power. How would it run an industry it wants to shut down? The report wonders too: “As demand for fossil fuel declines, will the presence of State-owned refineries inhibit an orderly phase out of refinery capacity?”

If Democrats in Sacramento want to reduce refinery production, nationalizing the industry a la Venezuela would work. But as the report muses: “What would drive how the State managed the refinery? Profit? Maximize production? Minimize production?” This is hilarious.

Sure, manage an oil refinery when the government cannot even manage the services such as education, public transportation, and police protection that it is supposed to provide. If we weren't laughing, we'd be crying.