Are Oil Companies Deliberately Gouging California Drivers?

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A spike in Los Angeles wholesale fuel prices and a negative report on West Coast gasoline inventories could spell trouble for California drivers in coming days.

Pump price surveys Friday show prices in California are zooming up even as they slowly decline in the rest of the country.

“Wednesday’s wholesale price for Los Angeles reformulated gasoline jumped by 40 cents after a report from the Energy Information Administration that inventories have dropped significantly locally,” says Jeffrey Spring, a spokesman for the Automobile Club of Southern California.

“It appears that the low-priced stations locally have already raised their prices, but given continued low oil prices and a possible supply increase in coming weeks if the Exxon Mobil refinery in Torrance begins production again, this may be a short-lived spike.”

Short-lived or not, refinery issues and other actions have raised the suspicions of a major consumer group in the state.

California drivers, who have paid an average of 74 cents more per gallon at the pump than drivers nationwide, have shelled out $4.5 billion more for their gasoline than other American drivers from February to June, claims Consumer Watchdog, a Santa Monica-based consumer advocacy group.

The nonprofit group says its analysis is based on statewide consumption and the higher amount oil companies have charged Californians compared to the rest of the nation for gasoline from February to June, when refineries started going down and gasoline prices began spiking.

Consumer Watchdog says this has cost California consumers $214 million extra per week or $180 more per California driver thus far since February.

"California oil refiners have overcharged drivers billions using every trick in the book to keep gasoline prices high from unusually low inventories, historically high exports, suspicious refinery maintenance, and unprecedented pricing strategies at their branded stations," says Jamie Court, president of Consumer Watchdog. "Californians are paying unreasonably and artificially high prices and California's oil refiners are getting rich off drivers' pain at the pump."

In its analysis to the Attorney General and the California Energy Commission's Petroleum Market Advisory Committee, Consumer Watchdog says it has documented how refinery outages, exports, and low inventories have kept Californians paying too much.

"It's a lot like the electricity crisis, companies moving resources out of state, shutting down power plants, and making huge profit at the expense of Californians," says Cody Rosenfield, energy researcher for Consumer Watchdog.

Demand for gasoline typically climbs during July and August, and the ability of supply to keep pace with growing demand can directly impact the price at the pump, it notes.

“Additionally, retail averages can also be impacted by Atlantic hurricanes or issues at refineries, both capable of limiting supply and putting upward pressure on prices for drivers,” AAA says.

“While these domestic factors could influence gas prices higher, the relatively low price of crude oil is expected to keep a ceiling on the price at the pump compared to recent years. AAA still expects drivers to pay averages below $3 per gallon for the rest of the year.”

California’s average price on July 10 of $3.499 is the highest in the nation. It is up 5.9 cents from a week ago, according to the AAA.

Nationally, prices are dribbling slowly downward. The current average is $2.757, down 1.3 cents in a week. A year ago, it was $3.639.

Following are the Central Valley average prices for Friday, July 10, driving from south to north, as reported by the American Automobile Association, with last week’s (July 3) averages in parentheses and [June 26] prices in brackets:

• Bakersfield, $3.499 ($3.486) [$3.486]

• Visalia-Porterville, $3.340 ($3.343) [$3.357]

• Fresno, $3.395 ($3.399) [$3.405]

• Merced, $3.374 ($3.343) [$3.380]

• Modesto, $3.196 ($3.156) [$3.169]

• Stockton-Lodi, $3.257 ($3.218) [$3.237]

• Sacramento, $3.265 ($3.217) [$3.226]

• Yolo, $3.250 ($3.223) [$3.227]

• Yuba City, $3.113 ($3.064) [$3.067]

• Chico, $3.21.4 ($3.240) [$3.258]

The market average price for self-serve regular gasoline in the Los Angeles-Long Beach area on July 10 is $3.656. That’s an increase of 10.3 cents from last Friday, the AAA says. In San Diego, the average price is $3.583, up eight cents from last Friday’s average, the AAA says.

For yet another week, the highest average price in California is in San Luis Obispo, where on July 10 it’s $3.698. That’s up 3.6 cents in the past week, the AAA says.

The Yuba City market continues to have California’s lowest average. On July 10 it is $3.113. But that’s an increase of 4.9 cents in the past week, the AAA says.

An independent in Vacaville has what might be lowest price in California for a gallon of gas on July 10. It’s $2.879, a cash price, says the price comparison website

Chico’s gas station in South San Francisco remains the most expensive gas in the state – still at $5.039 per gallon, says GasBuddy.

A major brand gas station in Ardmore, Okla., is posting what might be the nation’s lowest price on July 10 at $2.089 per gallon, according to GasBuddy’s reports.


GasBuddy bases its figures on reports from volunteer “price spotters” reporting specific locations in the U.S. and Canada. They are not independently confirmed.

The AAA’s prices are market averages for self-serve regular grade (87 octane) gasoline. They are calculated daily from credit card purchases and compiled by the Oil Price Information Service and Wex Inc., formerly known as Wright Express.

Not every station is surveyed and not every market is included in either report. Both price surveys note that there can be wide variations within any market.

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