California’s Bold Climate Initiative: A Potential Game-Changer for the Oil Industry’s Future

California’s aggressive stance against carbon emissions might soon have repercussions at the gas pump and threaten the very existence of the state’s oil industry, according to a leading executive from Chevron.

Andy Walz, the head of Chevron’s downstream, midstream, and chemicals sectors, cautions that an upcoming decision by the California Air Resources Board could impose billions in additional expenses on local fuel producers. This financial strain might force refineries to abandon California altogether.

“Should this financial burden be imposed… the question isn’t if refineries will shut down, but when,” Walz shared candidly with KCRA during an interview on Thursday.

The crux of the issue is California’s contentious “cap-and-invest” initiative. This program mandates that companies deemed significant polluters must either reduce their carbon footprint or purchase state-issued credits to continue operations. Revenue from this scheme supports various state projects, including the long-awaited high-speed rail system.

Last year, lawmakers, alongside Governor Gavin Newsom, extended the program for another two decades. Now, regulatory bodies are advocating for even stricter measures.

The planned revisions would include:

• Slash the number of carbon credits companies can buy
• Impose tougher emissions caps through 2030

Walz says that could saddle California refiners with billions in new expenses — while foreign fuel imports dodge the hit.

“That makes no sense when you look at global tensions right now,” he warned, pointing to instability in the Middle East and the threat of wider conflict involving Iran.

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Two California refineries have already shut down recently, and about 70% of the state’s oil supply is now imported from overseas. Meanwhile, roughly 90% of cars in the state still run on gasoline, according to state data.

Walz says the policy could send gas prices soaring more than $1 per gallon by 2030 and trigger major job losses.

“I am extremely worried,” he said. “I think we have an emergency in the state of California.”

He even floated the possibility of federal involvement, noting California hosts 32 U.S. military bases that rely heavily on fuel supplies.

“It’s important to national security to have the fuel those facilities need,” Walz said. “This isn’t just a California issue.”

State regulators aren’t backing down.

In a statement, the Air Resources Board said the program remains “the most cost-effective way” to hit California’s climate targets.

Spokeswoman Lindsay Buckley said the proposed changes could deliver $180.7 billion in statewide benefits over 20 years.

Public comments on the plan are open through March 9, with regulators expected to formally unveil the proposal in late May — setting up what could become one of the biggest energy showdowns in California in years.