Largest Californian overnight price spike

Since the refinery shutdowns and slowdowns that started on 1 February, Gas prices in California have increased by 80 cents /gal. On 27 February it was reported that gas prices jumped 17 cents/gal. overnight in Los Angeles making the California Senate hearings even more urgent according to Consumer Watchdog.

Jamie Court, Consumer Watchdog President said, “there is just no good explanation for why consumers are paying this much at the pump. When there are shutdowns, refineries make money hand over fist and now we have a much needed investigation into whether this could be the result of artificial supply manipulation. Oil company executives should be subpoenaed to answer for these outrageous price spikes.”

Refineries in California have great market power as they keep a small supply of special blend fuel. The California Energy Commission has said that California keeps less than half the days of refined gasoline supply on hand from the rest of America, 10 versus 24 days. Also, refineries in the state do not stagger periods of maintenance when operations are not running at full tilt.

On February 1, when the nationwide steelworkers strike loomed, Tesoro announced that it would close down its Martinez refinery for safety reasons, rather than leave it running at half capacity while seasonal maintenance was performed. However, at an investor conference in the middle of this month, CEO Geoff Goff told investors, “we can keep running with the staffing levels that we have…for a very long time.”

Consumer Advocate Liza Tucker said, “contract workers have been available to fill in at refineries on strike, including Tesoro’s refinery in Carson, and skilled retirees can also be brought in to run what amounts to a giant pressure cooker. Once a refinery gets going, the conventional wisdom is it doesn’t take that much to keep it going. The Senate needs detailed answers to question for Geoff Goff, why did you need to shut that refinery down if you are telling investors refineries can keep going with lower staff levels indefinitely?”

Senate Pro Tem Kevin de Leon’s announcement of hearings came in response to Consumer Watchdog’s repeated urging that state officials investigate refineries for price manipulation. California’s Attorney General and other state officials have not yet responded to the group’s request.

Edited from press release by Claira Lloyd

Read the article online at: https://www.hydrocarbonengineering.com/refining/02032015/largest-california-price-spike/