Speaking candidly about California’s energy laws and regulations during a recent interview on “Kudlow,” Kevin O’Leary called the state “the worst of every state in the union.” His frank remarks served as a sobering assessment of the future and financial feasibility of green energy projects, particularly in the Golden State.
Following BP’s cancelation of a significant wind energy project in New York, O’Leary expresses worries. This choice is in line with a broader pattern observed in other states, including New Jersey.
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“If you were going to do something that is a very long-term large capex project like offshore wind, not only do you need very stable subsidies, you’ve got to be able to get to the market under terms that make sense for return for investors, including these companies and the shareholders of these companies,” O’Leary explained.
According to O’Leary, many initiatives are not financially viable because of erratic subsidies, barriers from regulations, and insufficient market earnings. The decision to terminate the project delivered a serious blow to proponents of renewable energy, casting doubt on the notion that green ventures are sustainable and beneficial to society.
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While acknowledging the benefits of solar and wind energy, he also brought up the persistent issue of their high cost, especially when regulations become unduly harsh.
“None of these deals make any economic sense,” he said. “It’s great to have a green mandate, but what we saw in Dubai just weeks ago is that the world’s starting to realize the transition away from hydrocarbons is going to take a lot longer because solar and wind, while they have merit, do not make any economic sense.”
When the topic of Chevron’s recent statement of a potential four-billion-dollar cut to earnings from impairment charges on its oil assets in California came up, the discussion became more caustic. This was explicitly linked by O’Leary to the “hostile environmental regulations” of the state.
“The biggest problem is at the end of the day, and this is where the rubber meets the road, you don’t make any money. And it doesn’t work long-term if all you do is lose money. And that’s exactly what’s happening with that project.”
Formerly a leader in oil production, California has seen a significant downturn in this sector. At least in part, this decline can be linked to legal lawsuits brought against large oil firms like Chevron over climate change concerns.
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O’Leary gave a direct evaluation on the state of California.
“California’s a unique situation… Gavin Newsom, and I mean no disrespect, I like that guy, I’ve met him personally. I wouldn’t let him manage a candy store. He is so clueless to the competition going on between states.”
Reputable energy investor O’Leary expressed his reluctance to make investments in California. He made the point that other states, such as Texas, North Dakota, Virginia, and Oklahoma, had more enticing investment opportunities and more hospitable regulatory frameworks.
“Who would give a dime to California to invest in energy when the regulatory environment is so punitive you can’t make money?… We’ve got to wake up and smell the hydrocarbons.”
