A big merger in Big Oil has Bay Area connections, as San Ramon’s Chevron just announced they’re acquiring a smaller rival called Hess Corporation, reaping the gains of record profits generated by high gas prices.
2022 was a record year for oil industry profits, and 2023 may well be the same. And the industry has taken some public scoldings for keeping gas prices high and not investing in renewable energy amidst those record profits. San Ramon-based oil giant Chevron, known for their sometimes flaring refinery in Richmond that occasionally stinks up the community is among those companies enjoying record profits.
And their latest splurge with those profits does not indicate much interest in lowering prices or investing in renewables. CNN reports that Chevron is acquiring the smaller, New York-based oil producer Hess Corporation in a $53 billion deal.
Hess once had a chain of green and white gas stations across parts of the country, but sold those to Marathon in 2014. Now they just manage oil production facilities in Texas, North Dakota, and the South American nation of Guyana, which Chevron is acquiring. They’ve also traditionally had a line of toy trucks that are popular among collectors.
It’s unclear if the Hess brand will live on, even in the form of the toy trucks, or if it all will be pulled into the Chevron brand.
Per CNN, the purchase will “increase [Chevron’s] free cash flow, giving the company more cash on hand in the long term to do more share repurchases.” Moves like this are why Chevron has faced criticism for spending tens of billions is stock buybacks instead of lowering prices or exploring more renewables.
And as CNN also notes, Chevron’s stock price is up 42% since the Russian invasion of Ukraine.
This seems to be the direction Big Oil is going. CBS News’ writeup of the Chevron-Hess deal points out that just two weeks ago, Exxon Mobil announced a $60 billion acquisition of smaller rival Pioneer Natural Resources. That report also quotes a Monday research note from market analysts Vital Knowledge that predicts “a round of consolidation is underway that will likely see more transactions unveiled before the process concludes."
Chevron sold their old San Ramon headquarters in June 2022, prompting speculation the company would relocate to Houston, Texas. But instead, they moved their headquarters to a new location in San Ramon, and just shipped a few hundred jobs to Houston.
Image: MILL VALLEY, CALIFORNIA - JULY 26: In an aerial view, a customer prepares to pump gas into his car at a Chevron gas station on July 26, 2023 in Mill Valley, California. The national gasoline price has hit a three-month high after surging five cents in two days to bring the national average for a gallon of regular gasoline to $3.69. (Photo by Justin Sullivan/Getty Images)