Written by Catherine Reheis-Boyd, President & CEO, WSPA
The state of California’s energy sector was exemplified in this week’s Wall Street Journal article, “Another California Gift to Texas: Chevron explains to Sacramento why the state is losing jobs and investment,” written by the Editorial Board. Chevron’s recent announcement that it will write down its upstream assets in the state should serve as a wake-up signal on the challenges and opportunities facing our industry and the need for a balanced and pragmatic approach to our energy policies.
Chevron’s announcement sheds light on the impact of California’s current regulatory landscape, signaling concerns about the state’s attractiveness for investments. While acknowledging these challenges, it is essential to recognize that California has the potential to lead the way in shaping a low-carbon economy that includes the oil and gas industry as a key player. Our state can become a hub for innovation and sustainability by fostering a conducive environment for energy investments, not implementing policies that drive resources out of the state, restrict energy supplies or drive consumer costs up.
By leveraging the strengths of the oil and gas industry, collaborating with policymakers, and fostering innovation, we can position our state as a leader in the global transition to cleaner energy solutions.
Read the full article in Wall Street Journal HERE.
Wall Street Journal article summary:
Chevron’s recent decision to write down its upstream assets in California highlights the detrimental impact of the state’s energy policies on investment and job opportunities. The company cites ongoing regulatory challenges, including the cap-and-trade program, low-carbon fuel standards, penalties on refiner margins, and a law restricting new drilling near residential areas. Chevron argues that California’s policies make investments riskier, projects lower in quality, and costs higher, resulting in reduced spending in the state by hundreds of millions of dollars since 2022. The editorial criticizes Governor Gavin Newsom for pursuing measures that drive away fossil fuel investment without effectively reducing global CO2 emissions. It notes the decline in employment in California and the adverse effects on the oil-rich Kern County, where unemployment is 7.8%. Despite California’s struggles, U.S. oil production has surged, with Chevron redirecting investments to shale and offshore projects. The article credits fracking activities in states like Texas and North Dakota, along with court interventions against President Biden’s leasing moratorium on federal land, for sustaining national oil production and preventing a rise in gas prices comparable to California’s $5 per gallon.
“We have rejected capital projects” and canceled some “due to permitting challenges,” Mr. Walz noted, adding that California’s “arbitrary attacks on a disfavored industry . . . signal to every industry, entrepreneur, manufacturer, and employer that California is closed for business.”
– Andy Walz, Americas Products Business President, Chevron