Chevron Corp. has a strong a sense of nostalgia about its home base of California. In an interview with Bloomberg Television last week, Chief Executive Officer Mike Wirth lauded the company’s nearly 150-year long history in the Golden State, adding: “We are the only large oil company left in California.” Which begs the question: why stay?

The paths of Chevron and California are diverging inexorably. The state, led by Democratic Governor Gavin Newsom, is hostile to the fossil-fuel industry, despite voracious consumption of petroleum products there. Worse, the oil company’s bosses have become a convenient scapegoat for local politicians seeking to burnish their credentials with voters. It’s not just a political distraction; it’s also hurting the bottom line.

Earlier this month, Chevron announced it would write down the value of its oil production assets in California by several billion dollars “due to continuing regulatory challenges.” At the same time, the firm is fighting California regulators over the so-called margin penalty law. Those rules allow the state to set the maximum profit refiners can make processing crude oil into gasoline because… well, it seems the laws of supply, demand and prices don’t apply to the oil industry; capitalism is for everyone, bar fossil-fuel firms.

Chevron is transfixed by a sentimental yearning for the happiness of a former era. The petroleum giant has been in California since 1876, when its earliest processor, the California Star Oil Works, struck oil in the Santa Susana mountains north of Los Angeles. Soon after, it built an oil refinery in the San Francisco Bay Area, which it still operates, and turned the city into its corporate base. But times have changed.

Unsurprisingly, Chevron plans to spend far less money in California than it did in the past because, Wirth explained, those “investments are less and less attractive.” Still, the company remains loyal to its California roots as the location of its headquarters. But Chevron and its executives need to put sentimentality aside. It’s time to pack up and relocate. The move would deliver two benefits: It makes business sense, and it would send a strong message.

True, corporate relocations are relatively rare – many companies stay loyal to where they were founded, weathering the ups and downs of their hometowns. But they do happen, and the oil industry itself provides numerous examples. Exxon Mobil Corp. has moved twice since 1990, first to a suburb of Dallas from New York City, and from there to the outskirts of Houston last year. Shell Plc relocated its global headquarters to London from the Dutch city of The Hague in early 2022.

Chevron itself has moved, too, although by fewer than 50 miles. Two decades ago, it closed its downtown headquarters in San Francisco, a staple of the city at 575 Market Street, and moved into a business park in San Ramon, about 45 minutes away by car. Last year, it sold that location, and downsized into another nearby business park, which it currently leases. Today, about 1,800 people work at its San Ramon headquarters, including the CEO and chief financial officer.

Last year’s mini-relocation would have provided a great opportunity to move further away. Chevron decided against it, although it shifted more employees to Houston and exchanged outright ownership of its head offices for a leasehold. Today, the company employs more people in the Houston area than in the San Francisco region.

In selecting where to seat their corporate headquarters, companies should aim to tick three boxes: Attract a young and motivated workforce interested in the business, be close to their main operations; and establish a base somewhere that aligns with their values. For an oil company, California doesn’t tick any of those boxes. Texas certainly does, and maybe Colorado too. Chevron, in particular, is giving away the benefits that come with “agglomeration economies” — the geographic clustering of industries. That’s even most important as the American petroleum industry enjoys a renaissance, with Houston as its capital.

An argument for staying put Chevron’s existing significant business in California, particularly in refining. By keeping the state as its home, the company may hope to have a stronger influence than if it leaves. However, if the last decade is any guide, Chevron’s political influence there is rather limited, as is its financial clout. California’s large public pension funds have reduced their exposure to the company significantly. Today, the California Public Employees’ Retirement System and the California State Teachers’ Retirement System own about 7 million shares, or less than 0.4% of the total, according to data compiled by Bloomberg. A decade ago, they controlled 17 million shares. Perhaps also there’s a future in California for some of Chevron’s nascent new energy business lines. But for the stuff that Chevron is truly interested in — say, carbon sequestration or hydrogen — Texas is a better base.

When the Wharton business school looked in 2017 at why companies relocated, it found that sometimes it was a personal choice: The CEO wanted to live elsewhere, or the company wanted to attract a new boss who didn’t want to relocate. So perhaps Chevron is sticking with California because Houston isn’t San Ramon — in which case, Austin beckons as a way to move to Texas without abandoning all of the benefits of living in a hipster community. Either way, money should go to where it’s welcomed and stay where it’s well treated — neither of which is currently true of petrodollars and California.