By Dan Bacher, THE DAILY KOS
As a gusher of Big Oil lobbying money fouled the California Legislature and regulatory agencies, five refiners controlling California’s gasoline market — PBF Energy, Chevron, Marathon Petroleum, Valero, and Phillips 66 — have reported a combined 2022 annual profit of $75.4 billion.
That’s nearly three times the $27.8 billion reported for all of 2021.PBF Energy, the last of California’s Big Five refiners to report their 2022 profits, posted a total profit of 2.9 billion in 2022, according to an analysis by Consumer Watchdog.
As discussed in my previous articles, Chevron reported annual profits of $35.5 billion, Marathon Oil reported profits of 14.5 billion, Valero reported profits of $11.5 billion and Phillips 66 reported profits of $11 billion in 2022.
However, the group noted that PBF’s profits per gallon in California, like other refiners, took a nose-dive in the fourth quarter after Governor Newsom called for a special session to deal with price gouging.
“PBF’s per gallon 4th quarter margins in California were nearly half what it reported for the rest of the year – 41 cents per gallon in the 4th quarter as opposed to 74 cents, 82 cents, and 78 cents per gallon in the first three quarters,” according to the group. “This is in line with its historical margin of 41 cents per gallon since it began operating in California. Also, in the fourth quarter PBF’s California margins were no longer the highest among its four regions, bucking the annual trend.”
Jamie Court, president of Consumer Watchdog, said this nosedive in profits during the fourth quarter “shows that the Governor’s price gouging penalty proposal likely curbed the industry’s greed and brought PBF’s fourth quarter margins in line with its historical margins,”
“We need a permanent windfall profits cap in place to deter the outrageous profit taking that California’s big refiners engaged for most of 2022. This is the only thing that will protect average people from the outrageous price spikes,” he argued.
“Still, for the year, PBF made profits off California consumers at the pump of 58 cents per gallon in 2022, breaking the 50 cents windfall profit cap (the mark recommended by Consumer Watchdog) for the first time in California. The mark was only broken by refiners three times in the last twenty years, each time by Chevron,” Court continued.
In 2022, all five refiners broke the 50 cent per gallon windfall profit barrier, with an average 66 cents profits per gallon for the year, according to Court. Chevron posted 85 cents per gallon profit for the year, Marathon Petroleum 75 cents, Phillips 57 cents, and Valero 55 cents), according to Consumer Watchdog.
“If a windfall profits cap of 50 cents were applied quarterly, that would create $3.3 billion in price-gouging penalties for the five refiners for 2022. PBF would owe Californians a $706 million penalty,” stated Court.
Consumers should not expect an easing in gasoline prices in 2023, the company revealed on its investor call on 2022 results. CEO Tom Nimbley said inventories for gasoline and distillates “remain well below the five-year average in most places.”
A contributing factor is a heavy refinery maintenance schedule, taking refineries offline. These factors make for a “constructive” market set up going forward, PBF executives said.
“We believe that we are going to see some tailwinds behind gasoline as we move to the high driving season,” said Nimbley. “Overall, things are looking reasonably positive for products.”
“The market may look rosy for investors, but not for consumers looking for respite from price gouging at the pump,” said Consumer Advocate Liza Tucker. “Especially for millions of minimum wage workers that can spend up to 70% of their daily take home pay filling their gas tank when gas is $6 per gallon, as opposed to half their pay when it is $4 per gallon.”
Tucker said the Legislature is considering SBx1 2 (Skinner) to establish a windfall profits cap on how much oil refiners can make in profit per gallon of gasoline before it is considered excessive.
“Consumer Watchdog has suggested penalties kick in after 50 cents per gallon. Historically, over the last 20 years, California refiners have made an average profit of 32 cents per gallon and have only exceeded the 50-cent mark three times,” she stated. See slide 5 here.
“Refiners report gross refining margins per barrel that reflect the difference between what a refinery pays for crude versus what it charges for finished products. This allows Consumer Watchdog to calculate profits per gallon by dividing the reported margin per barrel by 42, the number of gallons in a barrel of oil, to arrive at a profit per gallon,” added Tucker.
Refiners report refining margins from their operating regions across the U.S., typically the West Coast, Gulf Coast, Mid-Continent, and East Coast. PBF only runs two refineries on the West Coast and they are in California—one in Torrance and one in Martinez—and so West Coast results are for California only, according to Tucker.
“PBF reported West Coast gross refining margins of $24.69 for the year, nearly tripling the $9.42 it reported for the year before. Its annual margins were the highest in California. That comes to a profit of 58 cents per gallon this year compared to 22 cents in 2021. Its quarterly margins in California were 41 cents per gallon, down slightly over the fourth quarter profit per gallon of 43 cents in the fourth quarter the year before,” Tucker said.
More information: www.consumerwatchdog.org/…
The news of the record combined profits of $75.4 billion by PBF Energy, Chevron, Marathon Petroleum, Valero, and Phillips 66 comes after the California oil and gas industry spent over $34.2 million in the 2021-22 Legislative Session against SB 1137, legislation to mandate 3200 foot buffer zones around oil and gas wells, and other bills they were opposed to.
Although the fossil fuel industry spent a big gusher of money in the latest session, it wasn’t a record session for Big Oil spending in Sacramento. The record session was in 2015-16 when Big Oil spent $36.1 million lobbying.
Big Oil spent a total of $4,220,214 in lobbying expenses in the last quarter from Oct. 1 to Dec. 31, 2022, according to data just posted on the California Secretary of State’s website. That brings the total of oil and gas corporation lobbying expenses to $34,270,001 in the eight quarters of the 2021-22 session: cal-access.sos.ca.gov/…
The Western States Petroleum Association, the largest and most powerful corporate lobbying group in Sacramento, spent $11,720,912 in the 2021-22 session. They spent $1,734,594 out of the $4,220,214 spent on lobbying by the oil and gas industry in California in the eighth quarter.
Chevron Corporation, the San-Ramon based oil giant that is infamous for environmental devastation and degradation from the Ecuadorian Amazon to Richmond, California, spent a total of $8,631,118 lobbying California officials in the 2021-22 session. They spent $782,341out of the $4,220,214 total fossil fuel lobbying expenses in the fourth quarter.
While a long and hard-fought campaign by environmental justice groups, with the help of Governor Gavin Newsom, was able to finally get SB 1137 approved by the Legislature, other important bills were stopped by oil industry-backed legislators. Those measures include a bill to ban offshore drilling off the California coast and another bill to divest State of California pension funds from investments in the fossil fuel industry.
In addition to stopping key climate justice bills, the gusher of Big Oil and Big Gas lobbying money also resulted in the approval of many new and reworked oil and gas well permits approved by the Gavin Newsom administration.
Since 2019, CalGEM, the state’s oil and gas regulator, has approved an astounding 13,725 total permits for oil and gas drilling in California, according to Consumer Watchdog and the Fractracker Alliance: c212.net/…
CalGEM approved a total of 3,382 permits in 2022, including 551 new well permits and 2,831 oil well rework permits.
But the money spent by the oil and gas industry in the 2021-22 session on lobbying was just part of the gusher of money that they spent to maintain their control over the regulatory apparatus in Sacramento.
The oil industry also spent $20 million in just two months to gather the signatures for a referendum to reverse SB1137, the law that mandates 3200 foot health and safety setbacks around new and reworked oil and gas wells, as gas prices soared throughout California.
In addition, the oil and gas industry also spent millions of dollars for legislative candidates it favored in the November 2022 election. The biggest sources of outside spending in legislative races in the November 2022 election cycle were oil and gas companies and electric utilities, according to Ben Christopher and Sameea Kamal of Cal Matters.
“Those organizations have spent more than $7.6 million, roughly one-fifth of the total. Most of that spending happened before Newsom announced a December special legislative session on his oil tax plan.”
Big Oil has been able to get away with what it does in California for decades because of the enormous influence the Western States Petroleum Association and oil and gas companies, have exerted over the California Legislature, regulatory agencies and media.
WSPA and Big Oil wield their power in 8 major ways: through (1) lobbying; (2) campaign spending; (3) serving on and putting shills on regulatory panels; (4) creating Astroturf groups; (5) working in collaboration with media; (6) creating alliances with labor unions; (7) contributing to non profit organizations; and (8) sponsoring awards ceremonies, including those for legislators and journalists.