Chevron Corporation

Date Founded: 1879

Industry: Petroleum refining

Corporate Headquarters: San Ramon, California

Type: Public

Overview

Chevron is an energy company based in the United States that focuses on the exploration and production of oil and natural gas, refining the raw materials into finished products, and selling those products to consumers and businesses. The roots of Chevron can be traced to the Pacific Coast Oil Company, created in 1879, though the company that became Chevron—Standard Oil of California—was not formed until 1906. Chevron grew into one of the oil industry’s giants, or "seven sisters" (along with British Petroleum, Exxon, Gulf, Mobil, Shell, and Texaco). Growth boomed in the 1930s when it began operations in Bahrain and Saudi Arabia and through the acquisition of Standard Oil of Kentucky in 1961. In 1984, with the acquisition of Gulf Oil Company, and in 2001, with a merger with Texaco, Chevron devoured two of its "seven sisters" (Exxon and Mobil merged just before the Chevron-Texaco merger as well). In 2023 Chevron ranked as the second largest oil company in the United States, behind ExxonMobil.

Chevron has operations across multiple continents, with a significant amount of its production occurring outside the US. In 2023, it had about 44,000 employees and produced more than 3.1 million oil-equivalent barrels a day. (Oil-equivalent barrels are a measure used to combine oil and natural gas production.) In 2022, the company reported revenues of $246.25 billion.

History

In 1879, investors formed the Pacific Coast Oil Company to operate an oil well in California’s Pico Canyon. Pacific was purchased by Standard Oil in 1900. Six years later, that company merged it with another firm and created Standard Oil of California.

In 1911, in the wake of a federal antitrust decision against Standard Oil, Standard Oil (California) became a separate corporation. Within a few years, through acquisition and growth, it was the largest oil company in California and the largest gasoline retailer in the western states.

Acquisition in 1926 of the petroleum business of the Southern Pacific Railroad boosted its production capacity by half. In 1932, Socal (as it was then called) struck oil at a lease in Bahrain. Six years later, Socal’s gamble to find oil in Saudi Arabia—which was not thought to have oil at the time—paid off with a major oil strike.

During the 1930s and 1940s, Socal opened fields in Louisiana, Mexico, Texas, Colorado, the Gulf of Mexico, and Venezuela. Major new finds occurred in Saudi Arabia and Indonesia. The company reached $1 billion in revenue for the first time in 1951 and doubled that figure by 1961, bolstered in part by the purchase of Standard Oil of Kentucky, which added to the company’s size and geographical reach, giving it a retail position in the southeastern United States.

The 1970s brought some difficulties, including the nationalization of the oil industries in Saudi Arabia, India, and Venezuela. The loss of those revenues was offset by new finds in Canada and Nigeria. The company reorganized in 1977 under the name Chevron USA, using a brand name under which it had sold retail products for decades.

In 1984, Chevron bought Gulf Oil for $13.3 billion, the largest merger up to that time. The acquisition doubled Chevron’s production capacity and increased its refining capacity and retail reach. The new entity—now called Chevron Corporation—soon became the leading US oil refiner and seller of gasoline products.

During the 1990s, the company shed older assets, such as aging refinery complexes, and launched new ventures in the North Atlantic, the North Sea, Angola, and Kazakhstan. In 1999, Exxon and Mobil merged to form an oil giant. Two years later, Chevron merged with Texaco and took the name Chevron-Texas. The 2005 acquisition of Unocal, another California-based oil company, strengthened its position as the second-largest US oil company and resulted in the change to its current name, Chevron Corp.

Throughout the early 2000s, Chevron continued to expand its operations, seeking to use imaging technology and other advancements to achieve a high success rate with its exploration efforts. The company also began investing in renewable fuel sources, including biofuels produced from nonfood plants and from waste products from the timber industry. However, in 2014 it began reducing its investment in these technologies and selling off related assets.

Through the remainder of the 2010s and into the 2020s, Chevron remained one of the world's leading energy companies. However, the year 2020 brought new challenges for the company; reduced oil demand associated with the onset of the COVID-19 pandemic early that year, combined with an oil price war between Saudi Arabia and the Russian Federation, both hurt Chevron's profits. As a result, the company revealed that it planned to cut its workforce by 10 to 15 percent.

Despite a difficult start to the decade, Chevron's profits quadrupled in the first part of 2022 as the Russian invasion of Ukraine in February of that year contributed to a spike in global oil prices. As the US and other Western countries planned to decrease their reliance on Russian oil imports, Chevron announced plans to increase its oil output and began looking into greater investments in renewable energy and liquefied natural gas. Chevron’s revenue increased by over 50 percent from 2021 to 2022.

Impact

Like other oil companies, Chevron has been involved in various charges of environmental damage. Several incidents have occurred in California. The company paid $500,000 in 1988 to settle a lawsuit over toxic emissions in Richmond, paid $1.5 million in fines in 1988 for violating federal air pollution regulations in El Segundo, paid $500,000 to California in 1991 to cover costs associated with an El Segundo oil spill, paid $1.1 million in 1997 over federal water pollution violations near Ventura, and paid a $7 million fine for not following air pollution regulations at El Segundo. After an oil spill off the coast of Rio de Janeiro in 2011, Chevron was sued by the government of Brazil, ultimately settling the suits for US$130 million. A massive fire at the Richmond refinery in 2012 resulted in Chevron paying $2 million in fines and being put on probation for more than three years. A 2011 lawsuit against the company for environmental damage in Ecuador originally resulted in an $18 billion judgment against Chevron (subsequently decreased to $9.5 billion); Chevron appealed, and the US Court of Appeals found in 2016 that the original judgment had been the result of racketeering and fraud.

Chevron operations at Perth Amboy, New Jersey, Colorado, Hawaii, and Utah have also been subject to fines and penalties, and in 2010, a pipeline owned by Chevron and BP leaked 18,000 gallons of oil into a Louisiana wildlife refuge. Chevron and other major oil companies committed to a total of $422 million in payments to settle a federal lawsuit covering clean water violations in twenty states.

Along with other petroleum producers, Chevron has been harshly criticized by many for its role in driving climate change. A 2019 report by the Climate Accountability Institute found that Chevron was the leading contributor to carbon emissions among investor-owned corporations; together with Exxon, BP, and Shell, the four corporations were responsible for more than 10 percent of global carbon emissions between 1965 and 2019; these emissions are one of the primary drivers of climate change. Chevron's political lobbying on behalf of the fossil fuel industry has also drawn criticism; according to the House of Representatives Committee on Oversight and Reform, the corporation spent $91 million on lobbying between 2011 and 2021. While in 2021, the company expressed a desire to achieve operational net zero status for its emissions by 2050, the desire was only "aspirational" and not a binding pledge.

Chevron has also been subject to disciplinary actions abroad, including in the United Kingdom, Brazil, Nigeria, and Kazakhstan. Perhaps the most notorious case is a lawsuit brought against Texaco in Ecuador before its merger with Chevron. After Ecuador’s courts ruled in favor of the 30,000 plaintiffs in a case involving toxic dumping, Chevron sold off all its assets in that country, leaving the government with nothing to seize to pay the $19 billion penalty (later cut in half by Ecuador’s highest court). In 2013, Chevron brought suit in a US court, claiming that some of the plaintiffs’ lawyers had violated the Racketeer Influenced and Corrupt Organizations (RICO) Act of 1970, the US antiracketeering law. The federal judge agreed and issued an injunction that would bar the plaintiffs from collecting the payment. They later sued Chevron Canada in Canadian court in hopes of taking assets there.

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