*This press release has been updated: Valero posted 3rd Q profit on CA Gasoline Margins that are 56.5% greater than other regions, not 70%. It made 72 cents per gallon on the West Coast, not 78 cents.
Los Angeles, CA—Valero’s 3rd quarter report to shareholders shows it made 56.5%* more per gallon in California than in any other region of the U.S. or the globe in which it operates.
Consumer Watchdog called for the California Energy Commission to expedite the process for setting a price gouging penalty under a new law passed this year, SBx1 2.
“It is time for the California Energy Commission to put its foot on the gas and set a price-gouging penalty on big refiners ripping us off at the pump,” said Consumer Advocate Liza Tucker. “It is time for the state to prevent refiners from using us as one big ATM.”
Valero, one of the five big California refiners that control nearly the entire gasoline market, reported net profits of $2.6 billion this quarter, down a tick from $2.8 billion the year before. Its refining sector reported third quarter operating income of $3.4 billion, down from $3.8 billion the year before.
3rd quarter gross refining margins of 72 cents per gallon were eye-popping on the West Coast, far higher than in any other of Valero’s operating regions. Valero reported margins on Gulf Coast at 41 cents; at 49 cents for the U.S. Mid-Continent; and 48 cents for the North Atlantic. The West Coast gross refining margin also blew past Valero’s 60 cents per gallon reported in the third quarter of 2022. Valero only has West Coast refineries in California.
The gross refining margins reported to investors understate the gasoline profits as jet fuel and diesel are included. Data reported by refiners to the California Energy Commission shows the average gross refining margin from all refiners in California just for gasoline was $1.29 per gallon in August, double the January margin of 66 cents, and has been over $1.00 per gallon since February. See: https://www.energy.ca.gov/data-reports/energy-almanac/californias-petroleum-market/california-oil-refinery-cost-disclosure
Historically, over the past two decades through 2021, shareholder reports show refiners did not exceed a gross refining margin of 50 cents per gallon—except three times by Chevron. See: https://seuc.senate.ca.gov/sites/seuc.senate.ca.gov/files/02-22-23_court_presentation.pdf
In 2022, all five refiners breached that 50-cent per gallon windfall profit barrier. This data is corroborated by a recent report by the California Energy Commission looking back ten years based on OPIS data. See: https://consumerwatchdog.org/wp-content/uploads/2023/10/Item_09_OIIP_Refiner_Margin_Penalty_ada.pdf
Last year, legislation empowered the California Energy Commission to form a special division to investigate gas prices in California and to set a price-gouging penalty, which Governor Newsom has called for. Last week, the Commission voted to begin such a proceeding that first involves the gathering of accurate data from refiners. SB 1322 requires refiners to report their margins to the regulator that then posts them on its website.
