Chevron threatens to leave California due to taxes, emission rules, other regulations — warning the state is playing ‘a dangerous game’

Eric EspositoSat, March 28, 2026 at 10:00 AM UTC

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A cyclist rides by a Chevron Station in Los Angeles, weeks after the company said it may pull its oil refinery operations out of the state.

Could California’s eco-friendly policies push it toward a fuel shortage?

That’s what Chevron president Andy Walz recently warned, saying state leaders need to rethink their laws as the Iran war puts a strain on the company’s operations.

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“They need to abandon the tax on refineries or they won’t have any refineries in 10 years,” Walz said in an interview with Bloomberg (1). “If it stays that way — Chevron will be gone in 10 years for sure. We won’t be able to make it.”

One reason this issue is so dire in California is its reliance on foreign imports, which Walz has called “a dangerous game.” Specifically, California and Chevron take in oil from Asian countries (2), most impacted by the Strait of Hormuz shutdown.

According to the nonprofit group Californians for Energy Independence (3), 70% of the state’s crude oil supplies are foreign imports. Since Chevron also sources its oil from regions now experiencing shortages, operating in California is increasingly unsustainable.

But beyond this supply shock, California’s regulatory climate isn’t all that kind to Big Oil. Policies that emphasize environmental regulations and taxes (4) on the fuel industry put further stress on Chevron’s costs.

In a recent letter (5) to California Gov. Gavin Newsom, Chevron explicitly criticized changes to the “Cap-and-Invest” program (6), which is a statewide policy that requires companies to pay permits for the carbon they produce.

In Chevron’s eyes, these tighter emissions caps and increased compliance costs translate to higher fuel prices and weaker energy reliability.

Chevron concluded that, “The California energy industry’s economic, industrial, environmental, and national security benefits have been the foundation of a healthy, prosperous state and nation. Adversarial policies at local, regional and state levels have eroded that foundation. These proposed regulatory changes threaten to destroy it.”

With two of the largest refineries in the state, a shutdown of Chevron’s operations would cut California’s capacity by 34% according to the California Energy Commission’s data (7).

An “energy island” with no easy escape

There are many reasons California is particularly vulnerable to gas price surges, but one of the biggest is its isolated infrastructure.

Unlike other regions that have well-connected pipeline networks, California is known as an “energy island” because it’s literally cut off from the rest of the U.S. gasoline supply (8).

The California Energy Commission (9) now reports that more than 90% of the gasoline used in the state is refined locally. In other words, California is incredibly dependent on its own refineries for fuel, so any local outage can mean serious supply shortages.

California’s oil industry has also been shrinking over the decades, with crude oil production in the state down 75% since the 1980s per a 2026 Stanford report (10).

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Another factor fueling California’s woes is its requirement for a special cleaner-burning gasoline blend called “CARB” or “CaRFG” fuel (11). Although this fuel helps reduce pollution, it’s more expensive and harder to produce, with only a limited number of refineries that can make it.

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Even before the Iran war, refinery operators have been struggling in the state, with companies like Phillips 66 (12) and Valero (13) halting operations.

Currently, AAA estimates (14) the national average for a gallon of gas is $3.98, but California is now at $5.84.

What to do if you’re caught in Cali’s energy crunch

So, what can average Californians do to get through this fuel scarcity scare?

The harsh reality is that everyone has to readjust their budgets to factor in rising fuel costs. But besides just preparing for higher gas prices, there may be more creative ways to reduce your fuel dependence.

And, no, that doesn’t mean having to run out and buy a trendy EV.

Instead, think about small changes like carpooling, combining trips or even considering a good old-fashioned bicycle whenever feasible to shave your gas costs.

Since prices can rise quickly after refinery outages, filling up earlier rather than waiting until you’re on empty may also help avoid the worst of these spikes.

As a final tip, if you don’t already have a gas price tracker like GasBuddy, it may be time to download one onto your phone. You could also check whether your preferred gas station has a loyalty program that offers perks to soften your pain at the pump.

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Article Sources

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

Bloomberg (1); The Hill (2); Californians for Energy Independence (3); California Department of Tax and Fee Administration (4); Chevron (5); California Air Resources Board (6); California Energy Commission (7); Union of Concerned Scientists (8); California Energy Commission (9); California State Senate (10); California Air Resources Board (11); Phillips 66 (12); Valero (13); AAA (14)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Original Article on Source

Source: “AOL Money”