California and Big Oil Are Getting Divorced
Recent moves by California and big oil companies are putting an end to the once iconic relationship between the state and its history as a fossil fuel producer.
Californians are coming to grips with the consequences of climate change right on their doorstep. It feels like the end of the era of classic Americana and the freedom that gas vehicles offered previous generations on America’s highways.
California a Century Ago
California was once synonymous with the oil industry and the interest of big oil companies. A century ago, it was the fourth-largest crude producer in the U.S., rising in the ranks as the years went by.
The first oil well in the state was drilled in 1870, and by 1910 California was producing 78 million barrels of oil every year. Eventually, oil became the state’s biggest moneymaker and number-one gross domestic product export.
Oil Skyrocketed California’s Population
In response to an oil boom between 1920 and 1930, the population of Los Angeles more than doubled, according to the Los Angeles Times. The oil rush echoed the Old West gold rush of the century before where people took their families and headed out west for better opportunities.
California’s oil became a huge contributor to America in later decades. This solidified automobiles and highways as an iconic part of the country’s classic culture.
From Exporting Oil to Relying on It
According to Californians for Energy Independence, today California’s economy entirely relies on its ability to acquire oil and gas. Despite being the seventh-largest producer in the United States, the state still needs to import more oil to maintain its current infrastructure.
Airports, commercial vehicles, and everyday items that people use like shoes need a petroleum product to make the use of it possible.
Big Oil Companies Withdrawing Support
Exxon Mobil and Chevron are the two largest oil companies in the United States. It was reported by Reuters these companies have disclosed an intention to withdraw a combined $5 billion worth of assets from the state.
Just last year the oil giant Exxon Mobil decided to end its efforts for onshore oil production in California. In the process, they ended a partnership with Shell PLC, which started 25 years ago.
Consumer Watchdog Comments
Jamie Court, the president of Consumer Watchdog, offered a reaction to the news for Reuters. “They are definitely getting a divorce,” Court said. “They’ve been separated for more than a decade, now they are just signing the papers.”
Consumer Watchdog is an advocacy organization that protects the rights of customers in California. This nonprofit group also protects taxpayer interests in the state.
Effect of Government Regulations
Sometimes both parties want the divorce, and in this case, California has done its part to separate from these big oil companies as well. Years of increasing regulations on the oil industry in the state have made doing business more difficult.
Exxon Mobil expressed its disappointment that the regulatory environment and restrictions have stopped its attempts to renew offshore oil production.
Moving to Texas
Exxon Mobil moved its headquarters to Houston, Texas, in 2022 (via Houston Chronicle). This follows a trend of many big companies leaving California to set up their base of operations in the Lone Star state.
Tesla, Oracle, and Hewlett Packard Enterprise have also recently moved their headquarters from California to Texas. This has led to a situation where Texas is now the biggest home for Fortune 500 companies in the United States, having more headquartered there than any other state.
Californian Resident Opinion on Oil Has Changed
Oil was once part of the Californian identity, but years of environmental impacts and rising prices have reversed this opinion.
The Public Policy Institute of California released a statewide survey in 2023 that found that 66% of California voters are opposed to oil drilling on the California coast. Most Californians believe in the realities of climate change, which oil production is a huge contributor to.
Gavin Newsom Is Unfriendly to Oil Companies
The governor of California, Gavin Newsom, has made political moves to attack the oil and automobile industries.
As part of his role as governor, he called for a complete ban on gasoline vehicle sales by 2035. His government administration filed a lawsuit in 2023 targeting oil companies for lying to consumers for more than 50 years (via California Governor’s Office).
Tech Has Replaced Oil in the Minds of Californians
The populace of California once obsessed over oil, muscle cars, and Americana. Now, this admiration has been replaced by the culture of tech startups, apps, and smart gadgets.
The state has become known for the glut of tech companies who got their start there. Huge household names like Google, eBay, Intel, Instacart, and Apple owe their origins to the Golden State.
The Divorce Seems Final
With California having such different values now compared to when its oil industry was thriving, it seems like there is no reconciliation between the two parties.
The state’s government is actively putting up roadblocks for the oil industry in favor of greener and more environmentally friendly solutions. Today California boasts six times as many clean-energy sector jobs compared to oil industry jobs (via the California Governor’s Office).