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Chevron (NYSE:CVX) shares have turned negative for the year after the company reported Q2 earnings that tumbled 26% in the past year to $4.43B, missing Wall Street expectations, largely blaming weaker refining margins and refinery maintenance at times when margins were stronger.
CEO Mike Wirth said he remains optimistic about Chevron’s (CVX) $53B attempt to buy Hess, even as arbitration hearings on the dispute with Exxon over Hess’ 30% stake in a joint operating agreement over offshore energy fields in Guyana will not occur for nearly a year.
But generating the most buzz may have been Chevron’s (CVX) decision to move its headquarters to Houston from California, its home base for more than 140 years, after the state’s climate regulations raised problems for the company.
“We believe California has a number of policies that raise costs, that hurt consumers, that discourage investment and ultimately we think that’s not good for the economy in California and for consumers,” Wirth told The Wall Street Journal in an interview.
Just last year, California Attorney General Rob Bonta sued Chevron (CVX) and other oil majors, arguing the companies had misled the public about their role in climate change.
Chevron (CVX) said in January it would write down as much as $4B in assets, mostly in California, citing regulatory challenges while also warning against the state’s “margin penalty,” which seeks to limit profits from refiners to prevent alleged price gouging.
Gov. Gavin Newsom signed a bill into law this year that gives California’s energy commission oversight power on oil companies to determine potential price gouging and impose corresponding penalties.
Oil production in California has declined by more than half in the last decade and several refineries have shut down; as a result, gasoline prices in the state have surged $1.16/gal above the national average.
“California’s regulators want to take over an industry in the name of mitigating the costs of their own destructive policies. No wonder Chevron is fleeing for its life,” WSJ said in an editorial.
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