Gov. Gavin Newsom and the Democratic-controlled Legislature are so accustomed to businesses leaving the state that they basically just shrug at every new announcement. Last week, Chevron – the nation’s second-largest oil company – announced it was shuttering its San Ramon headquarters and taking 2,000 jobs to Houston. The company started operations in California in the 1870s, so its exit inflicts psychic harm also given its association with state history.
Newsom’s office said in an official statement the “announcement is the logical culmination of a long process that has repeatedly been foreshadowed by Chevron. 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.” At least the governor and corporate officials can agree that moving jobs out of California is logical.
California’s Democratic leaders have long made transitioning from fossil fuels to renewables their core political program. This climate-change agenda has many facets, but state officials have decided to take a punitive approach toward the industry rather than one that focuses on incentives. As a result, California has the highest gas prices in the nation – and they are about to go higher.
The state has blamed those high prices on oil-company “greed.” But the higher prices – and it always amazes us that oil companies are so much less greedy in neighboring states – are clearly the result of California’s high taxes, special-fuels formation that reduces supply, and its long-running effort to force the fossil-fuel industry out of business. The latter has discouraged refinery investments.
No business should stay where it’s not wanted. As USA Today pointed out, “California sued Chevron and four other oil companies over what it said was a pattern of lying to the public about fossil fuel risks and causing billions of dollars in environmental damage.” That’s the kind of politically motivated lawsuit that imposes real costs on the industry (and consumers) – and telegraphs the unfortunate message such businesses aren’t welcome here.
The Wall Street Journal noted that Newsom’s energy commission is even floating the idea of a state takeover of the California oil industry. If you think gasoline is expensive now, just wait until the people who control it believe we shouldn’t be driving at all.
The state also has stepped up its regulations that impose costly new disclosure requirements related to greenhouse emissions. Chevron, which still runs refineries and other operations here, focused on the economic reasons for the move and downplayed any political rationale, but it’s not hard to see the likely connection between state policy and the move.
A study last year showed that the oil industry still supports (directly and indirectly) 1 million jobs in the state – and contributes significant economic activity and tax revenue. Despite the state-mandated shift to all electric vehicles, the vast majority of Californians still depend on internal-combustion vehicles. Even climate-change activists should realize that the oil industry will be with us for quite a while.
Energy shifts take time. Currently California’s electrical grid isn’t even capable of keeping up with the state’s clean-energy goals. With Texas officials welcoming oil companies with open arms, it’s a wonder Chevron stayed so long. Newsom may mock Texas and shrug at this loss, but at someday California might have to take its business exodus seriously.
