Below are highlights from the ‘Refining Profits’ report from Consumer Watchdog. The report looks at how oil refiners in California have fared over the last 10 years in their refining operations and compares the companies’ refining profits during periods of gasoline price spikes.
Over the last decade, gasoline price spikes in California, absent the economic downturn, have reportedly corresponded with huge profits for refiners active in the state. Specifically, over the last 10 year, Valero has averaged US$100 million in profit per quarter. During price spikes, Consumer Watchdog has reported that this has increased to US$220 million per quarter. For Tesoro, the report points out that average quarterly operating incomes sit at US$142 million per quarter but hit US$231 million during gasoline price spikes.
Over the last five years the report has found that Valero’s average quarterly refinery profits have not totally recovered since the recession. During the first quarter of 2015, as gasoline prices began to spike, Valeros’ operating income per bbl increased by US$1.55. The company reported US$82 million in California refining profit, the best first quarter figures operating income since 2009 and almost triple the average income since then. For Tesoro, despite closing a refinery during the USW strike and paying higher prices for gas on the spot market to make up for it, the report has found increased profits per bbl of 20 cents for the first quarter of this year. Tesoro registered a US$119 million profit on its California refineries, which is reportedly similar to its five year average of US$124 million.
The report has also highlighted that though gasoline consumption has dropped by 8% since 2005, average gasoline prices last year were 51% higher than in 2005.
Conclusions drawn by the report
- Oil refiners are making huge profits with each gasoline spike.
- Governmental intervention is the only help for changing a system that’s been tilted against drivers for the last decade.
California Watchdog has recommended that California legislature 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.
Read the article online at: https://www.hydrocarbonengineering.com/refining/11052015/refining-profits-california/