By JW August, THE TIMES OF SAN DIEGO
March 11, 2022
Just how much do oil refiners make in California? Only the owners of the five refineries in the state know.
They control 96% of gasoline sold in California, according to the California Energy Commission. But every driver in the state can find out how much refineries are making if Senate Bill 1322, the California Oil Refinery Cost Disclosure Act, gains traction in Sacramento.
California state Sen. Ben Allen, a Democrat from Los Angeles, said the bill would require the refineries to report their profits every month. Its time for transparency, he said, because “costs at the pump in California are inflated compared to neighboring states” yet it’s a “big black hole when it comes to data” about why it’s so costly.
“We ask the oil companies on behalf of California drivers: Let’s end the games of smoke and mirrors. Open your books and show the public your true costs of doing business,” Allen said.
Allen was joined at a Friday press conference by consumer activist Jamie Court, president of Consumer Watchdog.
“California has been an ATM for oil refiners for too long” said Court, “the pain at the pump is real. When truck drivers have to fill up at $5 to $7 a gallon we all pay more for the goods they are carrying to stores”.
Court says consumers should know that the fossil fuel industry in California “isn’t paying what they say they are paying” for oil and “its time to pull the curtain back.”
The Western States Petroleum Association that represents refiners has faced off with Court and his organization before. Kevin Slagle, speaking for the association, dismissed Court’s claims as “theatrics” and said the major reason for the cost of gas at the pump is the high cost of the crude oil used to make it.
As for what the future holds, Slagle said, “Experts recognize that unforeseen events — as we are seeing in Ukraine and around the world today — can have significant impacts.”
Court argued that it’s wrong for prices to rise when most oil is bought on long-term contracts at lower rates than the current market price.
“Every time crude oil costs go up, gas prices go up, but oil companies don’t buy crude oil that day or they don’t buy it on the spot market,” he said. “They buy crude oil on long-term contracts. They are paying a lot less than what the world price is now.”
The “big five” oil refining companies in California are Chevron, Marathon, PBF Energy, Phillips 66 and Valero. Consumer Watchdog said they sell gasoline to their own branded outlets for 30 to 40 cents a gallon above the price they sell the same gas to discounters like Costco and United Oil.
A 2019 report by the California Energy Commission concluded that retail gasoline margins in California are higher than those elsewhere in the United States.
Slagle blames California taxes and regulations. He said mandated fuel blend requirements, increasing state taxes, and regulations such as cap-and-trade keep prices high.
Jenn Engstrom, the director of consumer-advocacy group CALPIRG, said oil companies may blame high costs on environmental protection, but that’s only a small part of the costs Californians pay at the pump. “Especially now when there is so much fluctuation with gas prices its important we have better transparency so we can call out oil refineries if they needlessly raise prices,” she said.
Allen’s bill is scheduled to be considered next by the Senate’s Committee on Energy, Utilities and Communications, which is chaired by San Diego state Sen. Ben Hueso.
JW August is a San Diego-based broadcast and digital journalist.