In a recent appearance on ‘Kudlow,’ Kevin O’Leary didn’t mince words when discussing California’s energy policies and regulatory environment, labeling it as “the worst of every state in the union.” His candid commentary served as a stark warning about the economic viability and future of green energy initiatives, especially in the Golden State.
O’Leary’s critique comes in the wake of BP’s decision to cancel a significant wind energy project off the coast of New York, a decision that echoed similar sentiments and actions across other states like New Jersey.
“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 the O’Leary, such projects are economically unfeasible due to unstable subsidies, regulatory hurdles, and inadequate market returns. The cancellation was a significant blow to proponents of renewable energy, challenging the narrative that green initiatives are always beneficial and viable.
While acknowledging the merit of solar and wind energy, he alluded to their current economic impracticality, especially when regulatory measures become excessively punitive.
“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.”
The conversation took a more pointed turn when discussing Chevron’s recent announcement of a possible four-billion-dollar hit to profits due to impairment charges on its oil assets in California. O’Leary directly attributed this to the state’s “hostile environmental regulations.”
“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.”
He noted that California, once a leading state in oil production, has seen a significant decline in this sector, partly due to legal actions against major oil companies like Chevron over climate change issues.
O’Leary’s assessment of California’s situation was blunt.
“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.”
O’Leary, an energy investor himself, expressed his reluctance to invest in California, citing better regulatory environments and more attractive investment opportunities in states like North Dakota, Virginia, Oklahoma, and Texas.
“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.”