‘A Tough Place To Do Business’: Chevron Exec Details Company’s Decision To Move HQ Out Of California

A top Chevron executive detailed his company’s decision to move its headquarters out of California in a Thursday roundtable with reporters.

Andy Walz, president of Chevron Americas products, said that California’s crusade against conventional energy producers played a role in the company’s decision to move its headquarters to Texas. Measures like California’s 2035 ban on internal combustion engine vehicles and its emissions cap-and-trade rules were specific headwinds that played a role in the company’s decision to move its headquarters to Houston, Walz said.

“It is a difficult place to do business. It’s a difficult place to be headquartered. And we finally said, ‘Hey, that’s enough. We’ve got critical mass, we’re gonna move.’ We’re also going to improve our performance by getting everybody in the same location,” Walz explained.

Walz made clear that part of the reason for Chevron’s headquarters relocation is that parts of its operations and senior leadership have already been stationed in Texas, and that the company believes its performance can improve if employees and executives are in the same place. The company is not walking away from its assets in California, andChevron plans to continue operating them into the future, Walz said.

“California is a tough place to do business. It’s a tough place to recruit people. It’s a tough place to move employees. A lot of our employees move up through the company, they gain experiences in different geographies, different locations, and we have a lot of people that will not move to California. That makes it difficult,” Walz said. “California is a tough place to have a big employee base. It’s tough, its cost of living is expensive, and we were not able to get employees that didn’t live there to move there. And that’s not sustainable for us, to be honest.”

California has the third-highest cost of living of all states, trailing only Hawaii and Massachusetts, Forbes Magazine assessed in July. Overall, California has seen net outflows of population in recent years, with more than 800,000 people moving out of the state in 2022 alone, according to Forbes.

Additionally, more than 350 companies moved their headquarters out of the state between 2018 and 2022, according to Forbes.

“California has said, ‘Hey, you cannot buy a new car that has an internal combustion engine in it after 2035.’ So, that’s a headwind against investing in a refinery. On the books, they have a windfall profits tax or penalty, they’re evaluating how to deal with that, they want to cap the amount of profits you can make in your refinery. That is a headwind for anybody that would want to put money into it to try to get a return on their investment,” Walz said. “And the third thing that maybe is even a bit more crippling is this: they have a program called cap and trade, where they tax your CO2 emissions in the state of California. And that tax continues to go up every year, and it gets more burdensome every single year. So those three regulations, those three policies, really make it hard for me to want to put more capital into the state of California. Therefore, I think the business case there is really challenging.”

“Our competitors are looking at the exact same equation I’m looking at, and our money is going other places, and California can’t get supplied from Houston,” Walz said. “It doesn’t work.”

The Environmental Protection Agency’s (EPA) recently-finalized tailpipe emissions standards for light- and medium-duty vehicles — which have been characterized by critics as an “EV mandate” — are another policy that Walz believes will have “consequences” if implemented.

Walz’s comments on the business environment in California echo Chevron CEO Mike Wirth’s recent remarks to The Wall Street Journal, in which he said that “California has a number of policies that raise costs, that hurt consumers.”

As news of Chevron’s headquarters relocation broke earlier in August, the office of Democratic California Gov. Gavin Newsom told the Daily Caller News Foundation that the company’s decision was the “logical culmination of a long process that has repeatedly been foreshadowed by Chevron.”