Big Oil has fought for years to keep its secrets invisible. But this week, state officials may have finally realized that what is good for the oil industry has been devastating to Californians.
At a Petroleum Market Advisory Committee on Monday, Consumer Watchdog released its finding on the movements of petroleum tankers involved in the California gasoline market. The report, “Against the Tide: How Missing Tankers Pumped Up Gas Prices and Refiner Profits,” found that refiners calibrated imports and exports of gasoline to artificially inflate gasoline prices.
One of the main findings was that the lack of adequate real-time market information led to volatility in gasoline prices because of poor decisions from traders. When market players aren’t aware of upcoming imports and exports, they don’t know whether the market will be oversupplied or short, leading to the chaos seen in 2015 gas prices in California.
Drivers in California paid $10 billion more than they should have throughout 2015 based on consumption and prices. While not all refiners release California-specific data, those that did release 2015 data had their most profitable year in the state ever.
Sunshine would be the best disinfectant for this market. And at the end of Monday's meeting, the PMAC panel members seemed to agree.
PMAC will be providing recommendations to the California Legislature about how to reform the state’s clearly dysfunctional gasoline market.
PMAC Chair Severin Borenstein said transparency would be the focus of the next meeting, including important measures Consumer Watchdog has been recommending, such as full real time disclosure of imports and exports. This could bring important changes to the market.
Not only will smaller companies have a better shot at competing with larger refiners who control almost all aspects of the California market, publicly available real-time data will also give regulators and the public the ability to follow the market to see whether there are bad actors taking advantage of our state. The more eyes on the data, the better.
Below are the transparency measures Borenstein stated they would like to discuss:
California is the third largest gasoline market in the world – certainly large enough to bring in plentiful imports to refill problems with our gasoline production. With more light will come more accountability for oil refiners.