Los Angeles, CA—Chevron reported earnings for the year of $35.5 billion, more than doubling last year’s $15.6 billion, with financial data revealing the company also doubled its per gallon profits off consumers on the West Coast, Consumer Watchdog said today.
West Coast refining margins were a startling 85 cents per gallon for 2022, doubling last year’s margin of 37 cents per gallon. Chevron historically posted average profits per gallon of 46 cents over the last 20 years and only exceeded 50 cents three times in that period—until now. Chevron’s West Coast refining margins were the largest of any of its other regions.
The legislature is considering legislation, SBx1 2 (Skinner) to establish a windfall profits cap on how much oil refiners can make in profit per gallon of gasoline. Consumer Watchdog has suggested penalties kick in after 50 cents per gallon.
“Chevron’s profit reports are the poster child for why we need a price gouging penalty on excessive profits,” said Jamie Court, President of Consumer Watchdog. “Chevron’s pocketed billions of dollars too much off Californians’ hard earned money and made them choose between paying rent and filling up their tank. With 30% of the California market and an 85 cents per gallon profit margin, Chevron would have paid a multi-billion dollar penalty if the price gouging penalty had been in effect and would have had to return the money to consumers.”
Fourth quarter profits from Chevron’s refining operations alone nearly doubled to $1.18 billion over $660 million for the fourth quarter of 2021. For the year, the company reported more than doubling those refining profits to $5.4 billion over $2.4 billion last year.
Consumer Watchdog calculates profits per gallon by dividing the reported refining margin for the year of $35.80 per barrel by 42, the number of gallons in a barrel of oil. Refining margins reflect the difference between what a refinery pays for crude versus what it charges for finished products.
Price-gouging was at its peak in the second and third quarters of 2022. In the first quarter of 2022, Chevron made 63 cents a gallon on a refining margin of $26.50. Chevron raked in $1.12 per gallon in profits in the second quarter on a refining margin of $47.03 per barrel. It collected 95 cents a gallon in the third quarter on a refining margin of $39.99. In the fourth quarter, the gouging lessened to 70 cents on a refining margin of $29.58—still an unacceptable level.
Under a new law, SB 1322 (Allen), the Oil Refiner Price Disclosure act, Chevron and other California refiners will be required to report monthly the cost of the crude oil they buy versus the wholesale price of the gasoline they sell and their profits made per gallon. This reporting requirement, designed for transparency in gasoline pricing, will produce data in closer to real time and will be reported to the California Energy Commission starting in March.
“The price gouging penalty under consideration by California lawmakers will go hand-in-hand with those reporting requirements and is vital to enact,” said Consumer Advocate Liza Tucker. “This is a way to get a handle on the gouging practically as it is happening and apply a penalty whenever companies exceed 50 cents per gallon profit—a level that affords them plenty of earnings without affecting the supply of crude oil or gasoline.”
Marathon and Phillips 66 report their year-end earnings next week and PBF Energy reports in mid-February.