Chevron Corp. announced on Friday its decision to relocate its headquarters from San Ramon, California, to Houston, Texas. This decision marks the latest in a series of high-profile corporate exits from California, driven by increasingly stringent environmental regulations and business conditions.
Chevron's relocation will unfold over the next five years, with all corporate functions gradually migrating to Houston. "Positions in support of the company's California operations will remain in San Ramon," the company noted. Approximately 2,000 employees currently based in San Ramon will be affected by this move, while Chevron's Houston workforce numbers around 7,000.
CEO Mike Wirth and Vice Chairman Mark Nelson are set to move to Houston by the end of 2024 to "co-locate with other senior leaders and enable better collaboration and engagement with executives, employees, and business partners," according to Chevron.
The move has been celebrated by Texas officials. Governor Greg Abbott took to X (formerly Twitter), saying, "Texas is your true home. Drill baby drill." The Houston mayor's office echoed this sentiment, stating on X, "Great for Houston!"
The backdrop to Chevron's decision includes a series of legal and regulatory challenges in California. Last year, the state filed a lawsuit against Chevron and four other major oil companies, accusing them of misleading the public about the risks associated with fossil fuels. The legal environment in California has been increasingly hostile to the oil industry, with Governor Gavin Newsom aggressively pushing for renewable energy policies and holding oil companies accountable for their environmental impact.
In January, Chevron wrote down $4 billion from the value of its California assets, citing an "increasingly harsh regulatory environment" that was deterring investment. Andy Walz, a senior Chevron executive, previously warned, "These arbitrary attacks on a disfavored industry signal to every industry, entrepreneur, manufacturer, and employer that California is closed for business."
Chevron's decision to move its headquarters follows a pattern of other major companies leaving California. Tesla, SpaceX, and X (formerly Twitter) have all relocated to Texas in recent years, driven by conflicts with state authorities over regulatory and legislative issues. Oracle and Hewlett Packard Enterprise have also shifted their headquarters out of California.
In addition to announcing its relocation, Chevron also reported its second-quarter earnings on Friday. The company posted earnings of $4.4 billion, or $2.43 per share, down from $6 billion a year earlier. Adjusted earnings were $4.7 billion, or $2.55 per share, falling short of the $2.93 expected by Wall Street analysts.
Despite the move, Chevron emphasized that it will maintain a significant presence in California, where it operates crude oil fields, technical facilities, two refineries, and supplies over 1,800 retail stations. However, the company's shift of its corporate base to Texas underscores the broader trend of businesses seeking more favorable regulatory environments.
California's aggressive stance on environmental regulations and its recent legal actions against oil companies reflect the state's commitment to addressing climate change. However, these policies have also contributed to a business exodus, with companies citing the difficulty of operating under such stringent conditions.
State Assembly Republican leader James Gallagher criticized Governor Newsom's policies, stating, "This is an entirely predictable consequence of Gavin Newsom's constant demonization of the companies California depends on for energy, jobs, and tax revenue."
