The Observer: Proposed Law Requiring Oil Refiners To Disclose Profits Is Only First Step

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Opinion Column by Jim Shields, THE WILLITS NEWS

July 2, 2022

The Observer: Proposed law requiring oil refiners to disclose profits is only first step

As I reported to you last month, there’s a proposed law that would require oil refiners to disclose their per gallon profits on a monthly basis. The bill recently already passed out of the California Senate by a vote of 22-4.

It’s now in the state Assembly where this week it cleared the Natural Resources Committee by a vote of 8-3.

The bill, SB 1322, requires the oil refiners to disclose monthly their refining profits — the difference between average cost they pay for a barrel of crude oil and the average price they charge for the finished barrel of gasoline, minus their expenses.

With 42 gallons in a barrel, the public will know exactly how much oil refiners make per gallon of gas in California. Californians currently pay $1.40 more a gallon for their gasoline than the average in the other 49 states. Environmental costs add about 60 cents per gallon.

State Sen. Ben Allen, sponsor of the proposed law, said the bill would require the refineries to report their profits every month. It’s 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.

“Consumers deserve to know how much oil refiners are making off their pain at the pump,” said Jamie Court, president of Consumer Watchdog. “Recent quarterly profit reports suggest California oil refiners are pocketing $1 per gallon off the recent price spikes at the pump. That’s unconscionable.”

According to Consumer Watchdog, refining margins are typical industry measures. In fact, California refining margins are already published quarterly by two of California’s five oil refiners – so this is information that is already public. PBF Energy, one of the largest independent petroleum refiners and suppliers of unbranded transportation fuels, publishes refining profits from its San Francisco and LA refineries, which show that it made 78 cents per gallon on the gasoline it sold in the first quarter of 2022.  That’s double its profits from other parts of the country. Valero also publishes its margins for its West Coast refineries, which are exclusively in California. The other refiners publish Western regional margins.

“Requiring oil refiners to post their profits per gallon monthly will allow the public, regulators, and legislators to pinpoint periods of gouging and have the opportunity to respond,” said Court. “When people have to choose between gas and food, it’s time we heighten our scrutiny of oil refiner profits. Ultimately we need a new price gouging law to stop oil refiners from turning California into an ATM.”

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.”

According to Protect Earth, a newsmagazine that covers how America is addressing climate change, “These industries reported bumper profits, without raising the cost of extraction but increasing the price of gas. These industries not only get a free pass to emit heat-trapping gases that exacerbate extreme weather and climate disasters, they continue to get tax-payer funds. In 2020 the coal, oil, and natural gas companies received $5.9 trillion in subsidies.”

I say it’s way past time for this state to put together an actual anti-gouging law, so the Attorney General, Rob Bonta, who so far has done nothing to make life uncomfortable for these Big Oil Gougers, will be forced to protect citizens from these corporate predators.

This proposed profit disclosure bill is merely a first step.

It’s time to take a giant leap forward.

(Jim Shields is the Mendocino County Observer’s editor and publisher, [email protected], the long-time district manager of the Laytonville County Water District, and is also chairman of the Laytonville Area Municipal Advisory Council. Listen to his radio program “This and That” every Saturday at 12 noon on KPFN 105.1 FM, also streamed live:

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