Chevron Corporation said on Friday that it will transfer its worldwide headquarters from San Ramon, California to Houston, Texas before this year ends, marking a shocking loss to the state’s business sector. This action put an end to a long history with California that stretched for 140 years for this energy behemoth and speaks volumes of the problems that California continues to present for businesses.

Chevron which was founded in 1879 and has its origins in California gave the following reasons for their decision; The company said that the need to be leaner, cutting costs and being closer to its operations in the gulf coast was important. Houston, which is known as the energy capital of the globe, currently hosts a great number of oil and gas enterprises and has a favorable climate for doing business, on which many large companies have focused in recent years.

About 200 leaders only will be impacted by the relocation and they will be offered an opportunity to move to Houston. Chevron also said it will continue to do business in California, with facilities in San Ramon being home to its technology and innovation functions. However, symbolic for California is the loss of the headquarters of perhaps a holding of the biggest oil company of the world.

This action was made as more enterprises express concerns with the business environment in California due to high taxes, strict regulations and escalating living costs. Several giants have over the year moved their base from California to other states; for instance, Tesla, Oracle and Hewlett Packard Enterprise all moved to Texas.

The reactions to the news came shortly after the announcement from the office of California Governor Gavin Newsom; while the governor’s spokespeople conveyed disappointment at the loss of business, they affirmed the continuing strength of the state’s economy. The representative said, “At least, we cannot allow Chevron to get away with that; California is the fifth-largest economy and a technological powerhouse in so many industries.” In this regard we will endeavour to foster the kind of environment that fosters business and enterprise development and at the same time uphold the principles of sustainable use of natural resources and empowered communities.

The decision has elicited reactions among the policy makers and stakeholders considering the place of California large companies. While skeptics insist that uncompetitive and expensive regulation are pushing entrepreneurs out of California, optimists claim that the state provides brain power and education in form of talented employees, universities, and high living standards.

The decision of Chevron did not seem to have quite a devastating employment effect on California, since the company intends to continue employing a vast many people in the region. Long term consequences of loosing the corporate headquarters would be more severe and may likely deter investment decisions and consequently employment opportunities.

The field of energy in the California area has come under some significant pressures in the recent past, due to the aiming control measures in the environmental areas and the activities towards the renovation of energy resources. Chevron’s decision might be part of a trend of oil majors slowly moving their base from California where such policies are diametrically opposing to Texas where they enjoy more support.

Since Chevron is planning to relocate soon, efforts are beginning to be channeled toward assessing how California can redress the preoccupations of giant firms and halt corporate evacuation. Certain legislators have recommended the simplification of the state’s tax system and removal of certain barriers to doing business, but others advance the idea that the social and environmental agenda of the state should not be altered.

The consideration cannot be overemphasized since the relocation is not just an economic issue for Chevron. That gives rise to such philosophical issues of business as corporate governance and environmental management in the context of growing climate change challenges. In the development of sustainable energy technologies, location of operational facilities and executive management within energy firms could be vital in the formulation of their policies and images.

With the latest loss of yet another corporate behemoth, CALIFORNIA’S political leaders are now pressed with the problem of how to sustain progressive political agenda while at the same time ensuring that the state remains a business-friendly economy. The future months and years will probably reveal debates and policy changes as California strives to remain a world leading economy and as it addresses environmental and social objectives.