Oil Prediction: Another Year of Gouging Or a Year of Courage?

For California, 2015 was the year of the price spike. Could 2016 be the year of courage? 

A year ago, Consumer Watchdog warned that the oil industry would use 2015 to raise gas prices for huge profits and to push its political agenda. Predictably, the industry made 2015 a record year for California gas prices compared to the national average. In Los Angeles, consumers are still paying over a dollar more than the rest of the nation.

So on the cusp of 2016, what is to come? We can say with certainty, if lawmakers do nothing -- more gouging. Those who thought the spike was over after the summer have been proven wrong. In recent weeks, a spate of "scheduled" and "unscheduled" refinery outages kicked off a price spike just prior to the holiday driving season.

As in 2015, lawmakers have another chance to stop the petroleum industry before it's too late. State officials have been battered by misleading oil industry campaigns to attack climate change legislation. Refiners have beaten our democratic representatives into submission. California needs a courageous official to shine more sun onto the market so the price gouging stops. Will 2016 be the year?

If the legislature doesn't act, 2015 could prove to be the start of years of profiteering for California's oil refiners. Gas prices fluctuated wildly during the year. But when gas inventories stabilized this fall, gas prices mysteriously remained 75 cents above the US average. This is exactly what the industry wanted – to create a new norm where Californians get used to paying $1 more for a gallon of gas than the US average.

Refiners are sapping billions of dollars out of the California economy. Rome is burning. So where are our elected officials? Our Governor? Our Legislators? Our Attorney General? Maybe they are too intimidated by the behemoth industry, which shattered lobbying expenditures in 2015 and lavishly filled campaign coffers. At this point, the only game in town is a committee tasked by the Energy Commission with investigating price manipulation.

The California Energy Commission formed a task force, the Petroleum Market Advisory Committee, to take on the gas price problem. Despite the Committee's insistence that something is wrong with the market, it appears unable even to get its hands on the needed data. Refiners have shut the door tight on what the public can see. Consumer Watchdog’s president, Jamie Court, presented evidence before the Committee in December about how the industry manipulated gas prices.  His slide presentation below makes a compelling case that oil refiners are using their market power to artifically inflate prices, not merely to short the market on supply.

The industry must be getting worried. It's found a turncoat - former Attorney General Bill Lockyer, who led a charge in 1999 against unfair practices by the petroleum industry in California, is now on the oil industry payroll.

The next steps for our state officials are obvious. All that’s needed is a serious dose of courage. Those steps: more information. Give the committee the data they need to properly analyze the market. Shed light on the undisclosed 'dark trades’ that oil refiners use to dump gasoline at cheap prices to certain stations, and require refiners give the state information on outages and planned maintenance.

The sooner the investigations begin, the sooner refiners will be held accountable for the price gouging that is hammering California families. The longer officials wait, the more these industry practices become the new norm, and the harder they will be to stop.

Capitol Watchdog is owned and operated by nonprofit Consumer Watchdog. For more information about Consumer Watchdog visit http://www.consumerwatchdog.org

 
 

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