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CONTRIBUTOR
- Chevron announced Tuesday that it is anticipating up to $4 billion in asset value reductions for its 2023 fourth quarter results, a development which the firm attributes in part to California’s robust environmental regulatory structure, according to a regulatory filing.
- The impairment is a sign of trouble for California’s industry sector writ large, energy policy experts told the Daily Caller News Foundation.
- “Hundreds of small businesses at every aspect of oil and gas development are at risk, and sadly that is contributing to the state’s overall decline,” Daniel Turner, founder and executive director of Power the Future, an energy advocacy group, told the DCNF. “If the majors are unwilling to bend to Sacramento’s never-ending lust for regulation, how can small family-run businesses with limited resources begin to comply?”
Chevron announced Tuesday that it could face billions of dollars in impairments due in part to California’s regulatory environment, a development which some energy policy experts told the Daily Caller News Foundation could spell trouble for the energy industry’s prospects in the state.
Chevron said that it anticipates taking asset value reduction charges of up to $4 billion for the fourth quarter of 2023, an impairment that is partially related to oil and gas production in the U.S., especially in California, a state with a burdensome environmental regulatory structure that the company has highlighted in the past, according to a regulatory filing. The impairment charges are a troubling sign for California’s energy industry, as more companies could follow suit in a trend that would potentially imperil tens of thousands of jobs in the state, energy policy experts told the DCNF. (RELATED: Here’s How State Regulators Played A Role In California’s Rolling Blackouts, Wildfires)
“Chevron’s operations in California include its major refinery in Richmond, California, along with upstream operations producing heavy oil via steam injection in the San Joaquin Valley in the central part of the state. California’s increasingly strict air quality regulatory structure and other operational regulations have significantly raised costs related to both operations and rendered them less profitable,” David Blackmon, a 40-year veteran of the oil and gas business who now consults and writes regularly about the energy industry, told the DCNF. “The regulations in question apply industry-wide and impact any company trying to do business in the state. I would expect to see other operators announce similar impairment actions in the coming months … The oil industry’s struggles with the regulatory and business climate in California are reflective of the state’s entire population. The heavy-handed control from central planners has been the main cause of the massive population and business flight out of California in recent years.”
Gavin Newsom’s California Has Reached A New Milestone — A $68 Billion Budget Deficit https://t.co/M5b3dXJ9gl
— Daily Caller (@DailyCaller) December 9, 2023
California was one of the leading states of the U.S. in terms of oil production in 2022, with operators in the state pumping more than 124 million barrels that year, according to data from the U.S. Energy Information Administration (EIA). The state saw its local oil and gas production drop by nearly 30% over the course of the last four years, according to EIA data, a trend which Californians for Energy Independence attributes primarily to “state and local energy policies shutting down production.”
Chevron has previously highlighted the adverse impact that California’s policy has on its operations in filings with state officials. “Two decades of policy choices have reduced supply elasticity and severely limited refiners’ ability to react to higher prices,” the firm wrote in December comments to the California Energy Commission (CEC) regarding a state regulatory proposal.
“California’s policies have made Chevron’s investments in its home state riskier than investing in other states,” Chevron’s President of Americas Products Andy Walz wrote to state officials in November, according to Reuters. “In the past year, we have cancelled several projects due to permitting challenges.
On the state level, California is widely considered to be on the leading edge of climate policy, according to Stateline. Away from the regulations focused on oil and gas production, the state has pushed aggressive electric vehicle and truck rules, filed a climate change lawsuit against Chevron and other oil majors alleging that they deliberately tried to mislead the public about the nature of climate change and enacted a landmark corporate emissions disclosure requirement.
California’s local oil and gas production supports an estimated 50,000 jobs across the state, including 31,000 jobs in the otherwise economically depressed San Joaquin Valley, according to Californians for Energy Independence.
“Hundreds of small businesses at every aspect of oil and gas development are at risk, and sadly that is contributing to the state’s overall decline. If the majors are unwilling to bend to Sacramento’s never-ending lust for regulation, how can small family-run businesses with limited resources begin to comply?” Daniel Turner, founder and executive director of Power the Future, an energy advocacy group, told the DCNF. “What you will see over time is the talent leave for oil fields in oil states that reward hard work and expertise, and many businesses will close their doors for good. This is all reversible, all preventable and sadly completely foreseeable, yet California uses forward with these radical policies despite the ruin it brings their state.”
Neither Newsom’s office nor the CEC responded immediately to requests for comment.
All content created by the Daily Caller News Foundation, an independent and nonpartisan newswire service, is available without charge to any legitimate news publisher that can provide a large audience. All republished articles must include our logo, our reporter’s byline and their DCNF affiliation. For any questions about our guidelines or partnering with us, please contact licensing@dailycallernewsfoundation.org.
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I visited California, once. 🙂
Chevron has moved many of its people to Texas.
Its former campus has been sold back to the original
owners and the company is moving into new modern
buildings, that they now rent from that same developer.
Sunset Development buys Chevron Park; energy giant to still keep HQ in San Ramon | News | DanvilleSanRamon.com |
Okay. So at an extra cost of at least $1/gal of petro for the past 3 years, how could they be having $$ problems? Where has that $$ gone? in 2020 the USA used 127 Billion gallons of gas. so for 2021-2023 that would be about 400 Billion gallons. Where did that extra $400B go? Grifters, politicians, Notice folks. FTM.
Sure, I feel for all the working folks this article mentions. Chevron, Newsome and the rest can rot in hell.
oh, source: https://www.statista.com/statistics/188448/total-us-domestic-demand-for-gasoline-since-1990/
Not that long ago CA raised taxes on gasoline by more than $1, done in several steps over more than a year to make it appear to the general public that it was a cost of material increase, not a tax increase. $4 billion is nothing to the state which probably raises its interest payments requirements by that much every year, or more frequently, through its Especially Stupid Spending Departments.
I bet CA state employees are very, very well compensated.
The story does not say anything about money problems for Chevron. They are just writing down the value of assets in California. California hates oil companies. In fact California hates any sort of business. Their environmental policy will take them back to bark huts and caves. The last person to leave will not even need to turn the lights out.
Chevron reported a profit of $36.5bn in 2022. So not quite on the bones of their bum yet.
Correct. This is an issue about doing business, especially in the future. The Company is moving to protect itself (shareholders etc).
Gasoline is expensive in CA and also where I am — Washington State — for reasons beyond the company’s control.
If you own stock, say in a large mutual or pension fund, you will thank Chevron for looking after your interests.
This is correct. CA hates businesses. I met with the SCAQMD (South Coast Air Quality Management District) in 2011 about a renewable fuels project in Rialto, CA. The project would take Municiple Green Waste and turn it into fuels and green power. SCAQMD stated that they wanted to shut down all businesses in SoCal to reduce NOx emissions. The claim was that NOx increased asthma, but there is no science linking the causation of asthma with NOx, just that NOx increases symptoms. And let’s ignore that natural hydrocarbons are 50% of air pollution in the LA Basin.
Huh. I had a business in San Bernardino whose goal was to take municipal green waste and make it into methane to replace the natural gas shortfall we had in 1999. The anchor customer we pursued was California Steel in Fontana, which used 12,500 mmBTU per day in their big furnace. One of our selling points was reducing their NOx production by leaving a little CO2 in the methane, something that would not be allowed in a pipeline. That tidbit was a gift to me from my last boss at TRW, Jim Kliegel. Jim was the “K” in a company he founded a long time ago, KVB, which took thermochemical calculations developed during the Apollo lunar module descent engine program and applied them to reducing NOx output from gas-fired boilers. My company was a failure for reasons which have nothing to do with the technology or basic economic model. It would still work, and if you still had the desire, SCAQMD would probably be happy to support the idea. I fled Southern California in 2008, and have no desire to return. Besides that, I’m retired. But it would be cool on several levels to see someone make a business out of my idea.
That’s an operating profit isn’t it?
It’s the return to investors that’s the problem I suspect. If that’s eroded investors start looking elsewhere.
You don’t understand accounting. This is a balance sheet move and doesn’t involve cash. If the refinery asset on the balance sheet is listed as $1 billion, and if Chevron has to shut it down, they start lowering the value as an impairment.
However, it means future revenues will be lower, because assets produce revenues.
Obvious to the discerning, but not so much to the low information voter who have repeatedly returned the likes of Newsom to office. Gluttons for punish might I say.
Newsom for President!
‘Don’t know why everybody hasn’t fled that state’: Tomi Lahren blast new California law (msn.com)
I don’t make this stuff up. I couldn’t if I tried.
This is very good news for California. Making it hard for big oil to operate in the State. This is the socialist dream coming true.
A drop in the bucket for Chevron though. They just move investment to more welcoming jurisdictions.
They are getting fewer and fewer. Together with a shrinking market.
They were. That trend has stopped, if not quite reversed – I think the next few years will see more states reversing their suicidal energy policies as reality bites ever more deeply. As to the market shrinking – only in California, elsewhere it’s steady or growing.
While it may be true that there are fewer welcoming jurisdictions in USA, oil is a global business. Global consumption of oil is not shrinking, a bit flat last 10 years, but I would expect it to renew steady growth due to developing countries demand.
Still, not sure why you got voted so negatively…
Is there anything you know that is actually true?
Chevron and all major energy companies need to step up to the political fight.
They need to respect the demand to stop oil by stopping supplying oil to those who say they do not want it.
When the Just stop Oil crowd are told , OK we will stop supplying you with oil let us see how long before the movement does a 180 turn and start to demand oil.
My advice would be to ask the regulators that are placing ongoing blocks in the way of fossil fuel to simple sign an agreement offering them supply of oil and gas if they agree to support the supply industry. If the regulators refuse to do that simple thing then stop supplying them with oil and gas.
It is time to give these anti energy movements what they want. They want net zero so let us give them that zero.
I think there are lot of emotions in your post. I think I by and large understand and agree with them, but this is not how big businesses are operated.
Perhaps it is time for a ‘tougher way’ to operate? If companies (any) are going to lose ‘blood’ by a thousand cuts, why not call on a tough Doctor?
I honestly don’t understand why more businesses, large and small, aren’t leaving California.
Perhaps those that have not left are still making some money?
It is easy for a programmer or graphic designer to move, but moving a physical manufacturing business is a big expense.
Perhaps, Chevron should shut down it’s Richmond refinery “for repairs” for about 6 months.
I keep seeing the TV ads daily: PG&E keeps investing (80 years too late) for needed infrastructure to keep our energy “low cost” as the prices have gone up the first of the year and scheduled to go up again in a few weeks making California’s energy, 2nd highest in the nation even higher. But it’s now all the fault of PG&E. They’re a convenient whipping boy at the whim of nameless and unaccountable bureaucrats in a plethora of alphabet agencies who dictate that they trim the trees in the tinder-dry unlogged forests hugged to death on the one hand and told by Big Green on the other hand that if they trim the trees, they will be sued for harming the trees. They are told to put their money into solar and wind, an intermittent energy source we were lied to as cheap and free, but when the clouds come out, the sun goes down and the winds go slack, produce little to no power in the vast industrial waste lands hidden by the “Green Curtain.”
Our one-and-only Diablo Canyon which supplies 10% of California’s electricity needs was scheduled for shut down in the next couple of years but the Gov must have put on his glasses. The plan was to replace this facility that covers about a dozen acres (for the power plant) with about 120 square miles of solar panels that would replace it’s energy on a sunny day from about 10am to 4pm, if the sun is out… We import lots of our electricity from out of state as it is and up to 60% and more at times.
California is down to a dozen or less refineries for our petroleum needs but in spite of the vast known and proven reserves, keeps the oil in the ground and imports much of its needs from thousands and thousands of miles away from around the world with little evening coming from the rest of the states.
It was a lot different before Big Green got too big for its britches and we had cheap energy all around and a surplus of both electricity and petroleum and could provide for ourselves.
It’s no wonder that California hasn’t crashed and burned already.
contradictory statement there.
An economy on life support, but all of the attendants are making every possible effort to stand on the oxygen tubing.
From the article: “On the state level, California is widely considered to be on the leading edge of climate policy, according to Stateline.”
Climate change policy is the problem.
There’s no evidence for a need for a climate change policy. California politicians are bankrupting the State with their climate change policy, for no good reason.
This so-called “Climate Change” craze looks like the stock craze before the great depression.
Bloomberg estimated $US200 trillion to make the 2050 target.
Misspending that much money will surely bring on another depression.
There is only about $US40 trillion in cash, savings, and checking accounts in the world.
Investments like stocks and bonds are worth a little bit over $200 trillion