Chevron’s warning: cap-and-implode

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05.03.2026

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Chevron’s warning: cap-and-implode

Chevron’s warning to Gavin Newsom and the California Air Resources Board (CARB) must be taken seriously.

The energy company — which is moving its headquarters from California to Texas — warned that new regulations under the “Cap-and-Invest” program would push gas prices up in the state by a dollar per gallon.

California already pays $1.56 more per gallon than the rest of the nation, on average. The new regulations would drive our costs even higher.

Moreover, Chevron warned that the new regulations would threaten the few oil refineries we have left, and endanger half a million jobs in the local oil and gas industry.

As such, the company says that the regulations would cause “lasting and irreversible harm to California’s economy and energy security and broader vital American interests.”

“Cap-and-Invest” started out as “Cap-and-Trade.” The idea was launched in the 1990s, when the world started debating what to do about climate change (or “global warming,” as it was called then).

The European countries, with their state-centered economic policies, wanted governments to dictate the level of greenhouse gas emissions by controlling how much fuel people used.

The American proposal — championed by the market-friendly Clinton administration — was to cap the overall level of emissions, and then trade fuel permits.

That way, energy would be used by the most efficient consumers.

Ultimately, the international community could not agree on a single system.

But California policymakers wanted to set an example for the rest of the world — even if reducing California’s emissions would not have much effect on global climate.

So Republican Gov. Arnold Schwarzenegger signed AB 32, which created a state-level “Cap-and-Trade” program.

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In practice, the program did not reduce California’s emissions — but did provide subsidies to “green” companies like Tesla, which stayed afloat by selling their emissions permits.

Over time, new laws and regulations aimed at even stricter emissions targets. Last year, Newsom signed AB 2017, which renamed the program “Cap-and-Invest,” referring to plans to use revenues from permit sales to invest in “green” energy.

CARB has proposed new, amended regulations that would reduce the number of emissions permits to about 80% of what was originally provided.

That, Chevron said, is too ambitious.

It means that there will be too little fuel available for California’s needs, Chevron says.

And with restricted supply comes higher prices. That’s just economics.

Nuclear energy could help — but the state is down to one plant at Diablo Canyon, and Newsom barely extended its shelf life to 2030.

California needs to pursue an “all of the above” energy approach that allows the fossil fuel industry to survive alongside renewable alternatives.

Otherwise, California will be out of gas.

arnold schwarzenegger

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Chevron’s warning: cap-and-implode

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