Sacramento, CA – As oil refiners make a case in Sacramento for a bailout, new data published by the California Energy Commission shows oil refiners making 97 cents per gallon in gross profit from California gasoline in April – more than double their historical norms.
Consumer Watchdog said oil refiners are crying wolf in Sacramento seeking a bailout, while raking it in big profits at the pump.
Energy Commission data, produced under Senate Bill 1322 (Allen), shows gross refining margins – the profits indicator for refiners – at 80 cents per gallon in February, 75 cents per gallon in March and 97 cents per gallon in April.
“These are extraordinary margins for California oil refiners and they come as the Middle East crisis will give refiners an opportunity to raise prices higher and, when pump prices spike, oil refiners’ profit margins tend to spike as well,” said Jamie Court, president of Consumer Watchdog. “Governor Newsom must order the Energy Commission to establish a price gouging penalty immediately, as promised under his special session legislation two years ago, or Californians are in for even more gouging this summer. It’s time to stop feeling sorry for the oil refiners and to finish the job of reining them in. These refining margins are Exhibit A for the fact that the refiners are playing possum.”
The gross margins are what the refiners keep after the cost of crude oil, environmental fees, and taxes are deducted. The only refiner cost included in the gross margin is the operating costs for the refinery, which are reported by the refiners to the SEC at about 20 cents per gallon.
The data understates the gross profit margins made off consumers because it includes in the average the margins made on wholesale trades between refiners that sell at less cost. Another set of newly posted data from CEC now shows the higher margins made off consumers from retail sales alone.
In April, for example, the CEC puts the retail gross refining margin at $1.02 per gallon. The breakdown also shows the gross profit margin from distribution of gasoline, which is shared by branded refiners and retailers, and is .69 cents in April – this includes the so-called Mystery Gas Surcharge. The margin is twice as high as the average distribution margin nationally.
“Thirty to forty percent of what California drivers pay at the pump goes to the profits and overhead of the oil refining and distribution companies,” said Court. “That’s highway robbery and the state needs to crack down on this gouging by implementing the price gouging laws passed in 2023.”
The graphic below produced by the CEC shows the breakdown of costs for a gallon of California gasoline sold retail from April.
