Consumer Group Says Refiners Artificially Keeping California Gas Prices High

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Oil refiners are gouging California motorists by charging branded stations an average of 30 cents more a gallon for gasoline than unbranded stations, a consumer advocacy group said Tuesday.

Consumer Watchdog delivered its analysis at a meeting with the California Energy Commission Petroleum Market Advisory Committee in Berkeley.

The Santa Monica-based organization said that since May the state’s largest oil refiners have “engaged in unprecedented price manipulation” to keep California gasoline prices artificially high using their leverage over prices at their branded stations.

Consumer Watchdog President Jamie Court said the price manipulation comes at an especially bad time.

“We are asking whether the refinery closures that occurred earlier this year were warranted,” he said. “In December the oil refiners exported an all-time record amount of gas out of California. But in February the refineries started breaking down one by one, causing prices to shoot up. And just as supplies started coming in to backfill what was lost … this price manipulation starts.”

The price disparity appears to violate the Robinson-Patman Act — antitrust legislation that was written to protect businesses from arbitrary and unfair prices, Consumer Watchdog said.

Consumer Watchdog’s analysis shows that over the last 16 years the price charged by California oil refiners to their branded stations averaged 3 cents more than the price they offered to unbranded, or independent, stations. But for the past two weeks the average wholesale or “rack” price in Los Angeles that California oil refiners have charged branded stations has been 30 cents more per gallon than the price charged to unbranded stations. That, in turn, causes prices to rise at all gas stations.

On May 4 the price difference between branded and unbranded stations in the Los Angeles area was 3 cents per gallon. But it ramped up quickly. By May 10 it was 10 cents, and by June 18 the gap had risen to 31 cents.

Branded stations must buy gas at whatever price a refiner sets.

On Tuesday, the average price for regular in Los Angeles County was $3.55 a gallon, down 32 cents from a month ago and down 62 cents from a year earlier, according to San Bernardino County’s price for regular was $3.48 a gallon, down 34 cents from a month ago and down 65 cents from a year earlier.

Gordon Schremp, a senior fuels analyst with the California Energy Commission, attended Tuesday’s meeting and said the committee is hampered by the fact that it doesn’t have access to company-specific information that would be needed to investigate possible price manipulation.

“The commission purchases pricing information from the companies, but under the terms and conditions of the contracts that information cannot be made public,” he said. “So the committee is looking into ways to get access to that information.”

Consumer Watchdog said the price manipulation could also violate an agreement Tesoro struck with the California Attorney General Kamala Harris in 2013 when the company was allowed to purchase all of the Southern California Arco stations from BP.

In a letter describing the agreement, the Attorney General’s Office said, “Tesoro has agreed to maintain Arco’s status as a low cost fuel provider.”

Consumer Watchdog sent a letter to Harris on Tuesday, urging her to appoint an independent prosecutor to pursue the matter and to investigate whether the state’s refiners are violating the anti-trust law.

“California drivers are literally losing billions of hard-earned dollars each month,” the letter said. “They need your help.”

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