Feb 8, 2024
“Shark Tank” investor and businessman Kevin O’Leary urges California governor Gavin Newsom to “wake up and smell the hydrocarbons” when it comes to the state’s battle against climate change.
California’s energy policies have come under fire lately, with Chevron’s U.S. refining division chief Andy Walz accusing the Golden State of playing a “dangerous game” that risks gasoline price spikes and shortages. The premium California drivers pay for gas over the national average may rise significantly if lawmakers continue to enact policies that push for low-carbon fuel standards, he told Bloomberg.
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On Feb. 2, Chevron reported an overall profit of $21.3-billion in 2023, a 40% decline from the previous year, despite increased oil and gas production.
O’Leary’s been on California’s case for a while now. In an interview with Fox Business on Jan. 3, he slammed the state’s “uncompetitive” energy policies and called California’s management “the worst of every state in the union.”
Despite claiming to “like” Newsom after meeting him in person, O’Leary described the democratic governor as “clueless to the competition” in the energy market between states — adding, “I wouldn’t let him manage a candy store.”
He called California “a very bad place to do business” for energy companies and their investors. Is O’Leary right?
California vs. Big Oil
In late 2022, Newsom announced an ambitious climate action plan that would slash greenhouse gas emissions by 85% and drop gas consumption 94% by 2045.
After reporting Big Oil made $200 billion in profits in 2022, Newsom accused these companies of “fleecing Californians at the pump” and promised to hold them accountable. State lawmakers are considering capping refining profits.
Speaking at the opening ceremony of New York City's Climate Week in September, Newsom accused oil supermajors of “lying” about climate change. He said: “The climate crisis is, after all, a fossil fuel crisis. They continue to play us for fools. I’ve had enough and I’m sick and tired of this.”
In the same week, California filed a civil lawsuit against five energy giants — Exxon Mobil, Shell, BP, ConocoPhillips and California-based Chevron — accusing them of misleading the public and downplaying how fossil fuels are contributing to climate change.
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Chevron CEO Mike Wirth rejected that claim, telling Bloomberg: “Climate change is a global issue. It calls for a coordinated global policy response, not piecemeal litigation that benefits attorneys and politicians.”
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Investment capital in California
The Golden State’s not-so-golden treatment of Big Oil has had a huge impact on its willingness to invest in the nation’s most populous state.
According to Bloomberg, in December, Walz wrote in a filing: “California’s policies have made it a difficult place to invest so we have rejected capital projects in the state.”
He added: “Such capital flight reflects the state’s inadequate returns and adversarial business climate.”
As an investor in the energy industry, O’Leary has rejected California because of its “bad policy [and] weak management” that he claims is “hurting the California economy and people.”
Instead, he would rather pump money into states like North Dakota, Virginia, Oklahoma and Texas because “they’re competing for my money” and have regulatory environments that boost — rather than hinder — energy security.
“Who would give a dime to California to invest in energy when the regulatory environment is so punitive you can't make money?” he said. “That’s what Chevron’s telling everybody.”
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Bethan Moorcraft is a reporter for Moneywise with experience in news editing and business reporting across international markets.
