Consumer Watchdog’s new report, ‘Refining Profits: How Californians Get Fleeced At The Pump’, shows that oil refiners have made large profits from gasoline price spikes recently, and over the last decade.
"The proof's in the oil companies' own profit reports," said Jamie Court, President of Consumer Watchdog. "California drivers are getting gouged and California refineries are getting richer every time a refinery goes down and gasoline prices go up."
First quarter profit reports indicate that recent price spikes, precipitated by refinery outages that started in February, translated to big profits for two of the state's major oil refiners, Valero and Tesoro, that specifically report their California refining data.
Valero, the state's fourth largest refiner, nearly quadrupled its typical quarterly profits in 1Q15 as gasoline prices began to spike. Over the last five years, average quarterly California refinery profit for Valero was US$25 million. In 1Q15 Valero's profit was US$82 million.
Tesoro, the state's second biggest refiner, which shut down its Martinez refinery in early February and had to buy its gasoline on the spot market to fulfill contracts, still made a profit of US$119 million in 1Q15.
On Monday 4 May, California gasoline prices were US$3.71 per gallon, US$1.09 above US prices, and up 31 cents in a week. Consumer Watchdog analysed Tesoro and Valero profit and production data from the last decade and found that refiner profits were twice as high as the refiners' average quarterly profit in quarters where gasoline prices spiked.
"Their incentive is to keep the current system of low inventories, downed refineries and little transparency in place,” the report notes. “Governmental intervention is the only hope for changing a system that's been tilted against drivers for the last decade."
Consumer Watchdog called on the California legislature to take the following steps to benefit consumers:
- Create greater transparency and accountability for refiners. California should publish refinery maintenance schedules, outages, and accidents in real time, and ask refiners to publicly disclose weekly supply figures.
- The state should require refiners to keep another week's worth of gas supply on hand so that it matches national days of supply.
- The state should accelerate the transition to alternative transportation technologies such as electric vehicles.
Click here to access Consumer Watchdog’s report, ‘Refining Profits: How Californians Get Fleeced At The Pump’.
Adapted from press release by Rosalie Starling
Read the article online at: https://www.hydrocarbonengineering.com/refining/06052015/refiners-profits-increase-with-gasoline-price-spikes-713/