Going After California’s Gasoline Gougers & Climate Changers

As California drivers take to the freeways this Labor Day weekend, they will be paying a premium for their gasoline that's 88 cents more than the typical US driver. With crude oil prices at historic lows, and California oil refining profits at historic highs, the Golden State is getting gouged.

A new analysis by Consumer Watchdog shows Californians have paid $5.3 billion extra for their gasoline due to the higher amount Californians are charged than the rest of the nation since February. That's $220 for each California driver. The analysis shows Californians paid $900 million more for their gasoline than typical Americans in August alone. The calculation uses California consumption and both US and California gas prices, taking into account California’s marginally higher taxes and deduction.

To view Consumer Watchdog's press conference presentation (9/3/2015) on California's gouge gap and exports, click the image below.

California oil refiners have ironically taken to the airwaves with millions of dollars of our money to claim that pending legislation to reduce petroleum use by 50% in 15 years will drive up costs at the pump.  These oil refiners' profiteering is what's really the problem, and Senate Bill 350, the greenhouse gas reduction bill that is the subject the refiners' misleading commercials, will actually reduce gasoline prices in the state.

The introduction of EV and other  fuel techonoligies that bypass petroleum, which are increasingly cost-effective, through SB 350 will make gasoline less expensive.  That's why refiners are fighting SB 350 so hard. It prevents their supply and price manipulation by cutting their market share in half.

If you want to know why Californians have been paying one dollar more per gallon than the rest of America for their gasoline for most of the Spring, it comes down to two words: low inventories.

California’s four oil refiners, who control 78% of the gasoline market, keep the state running on empty. And they keep the market in the dark about their refinery outages and supply issues so other smaller players don't have the information they need to import fuel and fulfill demand. The result: big prices and big refining profits.

Refiners have us over a barrel. SB 350 takes away some of those barrels and reduces the refiners' ability to keep California running on empty.

California’s oil refiners made historic profits from the $5.3 billion extra Californians paid for their gasoline.  

Tesoro, the state’s second largest refiner, saw bigger California oil refining profits in its second quarter than ever before.  Chevron, the largest oil refiner, had the best first half of the year ever from oil refining profits, and 54% of its refineries are in California. The fourth largest refiner, Valero, had an 1100% increase in California oil refining profit this second quarter over last year’s.

Gas prices are at the same levels as last year, but crude oil costs are less than half what they were. So oil refiners are simply pocketing the extra money that went to crude last year because they can.  State data from July shows oil refiners tripled their usual 48 cents take-home on every gallon, making a record $1.61 per gallon.

Sacramento has yet to deal with the problem directly in the short term by requiring oil refiners to maintain adequate supplies, be open about their refinery and supply problems, and face penalties for misleading and shorting the market.

With eight days left before the legislature closes for the year, SB 350's fate is a critical piece of the puzzle long term, but transparency also needs to be applied to the oil refiners to prevent their supply manipulation. Consumer Watchdog has committed to working with NextGen Climate founder Tom Steyer on a ballot measure should the legislature not act.

The ballot measure will have to be filed in October to make the November 2016 ballot so the next eight days is the legislature's last chance to prevent the costs from the Golden State gouge to continue to mount before voters get their turn.

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