CALIFORNIA FOCUS
FOR RELEASE: TUESDAY, MAY 31, 2022 OR THEREAFTER
BY THOMAS D. ELIAS
“DOUBT
REMOVED: OIL REFINERS GOUGING US”
There was
some room for doubt back in February, when gasoline prices rose precipitously:
Until the oil companies who refine most California gas unveiled their
first-quarter profits, it would be impossible to be sure the spike stemmed from
price gouging.
That was
because the pump price increase from about $4.30 per gallon to nearly $6 (and
more in some places) came just as the United States announced a boycott on
Russian oil as a punishment for the invasion of Ukraine.
Price
gouging seemed the logical explanation for the hike. Russian oil amounted to
less than 3 percent of California’s supply; why should its sudden disappearance
cause a price hike of 12 times that much?
Doubt
about this should now disappear from the minds of consumers. They were taken
advantage of by oil companies in a systematic, cartel-like manner as every
gasoline refiner raised prices at the same moment.
That is
now clear from the very eagerly-awaited quarterly financial reports. They show
profits of the five major firms making 96 percent of this state’s gasoline all
rose dramatically in the first quarter. Because the price gouging did not begin
until mid-February, it had no effect for fully half the first-quarter time
period.
The five
companies include Chevron, Marathon, Valero, PBF Energy and Phillips 66. Their
results, says Jamie Court, head of the Consumer Watchdog advocacy group, “show
that the Golden State Gouge is real. Oil refiners exploited the crisis in
Ukraine to make a mint from California drivers.” Yes, they also profiteered in
the rest of America, but not like they did here.
One
difficulty in measuring this stems from the fact that most big California
refiners do not break out their California profits from what they make
worldwide.
An
exception is PBF Energy, owner of refineries in New Jersey, Delaware,
Louisiana, plus those in Martinez and Torrance that formerly belonged to Shell
and Exxon Mobil. PBF's profits from its Torrance facility grew from $15.75 per
barrel in 2021 to $32.84 this year, returning more than twice the previous
take. That meant PBF, which markets to name brands, smaller chains and
unbranded gas stations, made about 78 cents per gallon in profit this year
compared with 42 cents last year.
While
other refiners here don’t break things down by state or individual refinery,
Chevron made a $480 million profit in the U.S. in this year’s first three
months, compared with a loss of $130 million last year.
The other
big refiners reported similar huge increases in profitability, the obvious
result of their price gouging. When he announced the ban on Russian oil,
President Biden warned them not to gouge, but they did it anyway, with no
penalty.
Partly,
that’s because most refiners effectively hide their per-gallon profit margin.
This could end in California if the Legislature this summer passes a bill known
as SB 1322, sponsored by Democratic state Sen. Ben Allen of Santa Monica.
Allen’s measure would force the Big Five refiners in this state to report how
much gas they make and sell here and the margins they net from each gallon sold
to drivers.
Many
Californians habitually blame the fact that pump prices here are nearly the
highest in the nation on California’s higher-than-usual fuel taxes. But those
levies only account for about 60 cents per gallon, and the difference between
the average price in California and elsewhere is about $1.30. For sure, drivers
here deserve to know why they pay an unexplained 70 cents more per gallon than
folks just across state lines.
Says
Court, “California has been an ATM for oil refiners for too long.” He suggests
that if oil companies had to report their per-gallon profits on a regular
basis, they would feel some pressure to hold the line on prices better than
they have.
So a lot
of money hangs on the fate of Allen’s bill, which passed its first Senate
committee test unanimously. That’s money which could help a lot of families now
forced to choose between buying gas or food or shoes.
-30-
Email Thomas Elias
at tdelias@aol.com. His book, "The Burzynski Breakthrough: The Most
Promising Cancer Treatment and the Government’s Campaign to Squelch It,"
is now available in a soft cover fourth edition. For more Elias columns, visit www.californiafocus.net
Suggested pull-out quote: “Refiners effectively hide their profit margin on each gallon.”
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