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Chevron plans to move its headquarters from California to Texas, becoming the latest major company to leave the west coast state after complaining of excessive regulation.
The second-biggest US oil company said on Friday that it would leave the state where it has been a fixture for almost 150 years following clashes with authorities over penalties and climate policies it has said render California “closed for business”.
It is the latest in a wave of corporate defections from California to Texas as companies are lured to the Lone Star State by the promise of lower taxes and lighter regulation. Elon Musk said in July he would move the headquarters of X and SpaceX.
Chevron said chief executive Mike Wirth and vice-chair Mark Nelson would relocate from its headquarters in the Californian city of San Ramon by the end of the year, which would “enable better collaboration and engagement with executives, employees, and business partners”.
The company already has significant operations in Houston, with about 7,000 employees in a city that dubs itself the “energy capital of the world”. There would be “minimal immediate relocation impacts” for its roughly 2,000 employees in San Ramon, the company said.
It will gradually move all corporate functions to Houston over the next five years, with positions supporting its California operations remaining in San Ramon.
The decision is a win for Texas, which has sought to attract companies with its hands-off, small government approach. The state does not have a corporate tax, compared with a rate of about 9 per cent in California.
More than 300 companies have moved to the state since 2015, with more than half coming from California, including Tesla, HP and CBRE. The influx has helped to drive a boom that has turned the state into the eighth largest economy in the world — ahead of Canada, Italy and Russia.
Chevron’s California roots date back to the establishment of the Pacific Coast Oil Company in the 1870s. The group was later subsumed by JD Rockefeller’s Standard Oil, becoming Standard Oil of California after its break-up in 1911.
Chevron has criticised the approach of Democrat-run California towards the oil industry for some time. In January, it lashed out at what it described as an “increasingly harsh regulatory environment” and wrote down the value of its assets in the state.
California has sued oil companies including Chevron for allegedly deceiving customers over the risks of climate change, calling on the groups to surrender profits.
Chevron clashed with authorities this year over a new law that aims to penalise oil companies for allegedly “price gouging” consumers. The so-called margin penalty law limits the profits refiners can make in the state, where motorists pay among the highest petrol prices in the US.
“Setting a margin penalty would absolutely discourage investments here,” Andy Walz, president of Americas products at Chevron, wrote in a December letter to the California Energy Commission.
“Further, these arbitrary attacks on a disfavoured industry do more than this — they signal to every industry, entrepreneur, manufacturer and employer that California is closed for business,” he wrote.
The relocation announcement came as Chevron reported second quarter net income of $4.4bn, down from $6bn a year ago and below analyst expectations as the company was hit by weaker refining margins.
