Consumer Watchdog Alleges Gas-Price Manipulation in California

Published on

BERKELEY, Calif. – Advocacy group Consumer Watchdog delivered a letter earlier this week at a meeting of the California Energy Commission (CEC), which is charged with investigating gas-price manipulation. The letter included analysis showing that since the end of May, California's largest oil refiners have engaged in “unprecedented” price manipulation to keep gas prices artificially high using their leverage at their branded gas stations.

The tactics could violate both federal anti-trust laws, Consumer Watchdog said, and it is calling for the AG to appoint an independent prosecutor.

The group’s analysis claims that over the last 16 years, the price charged by California oil refiners to their stations averaged three cents more than the price they offered to unbranded, independent stations.

For the last two weeks, the average rack (wholesale) 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, according to the group.

Similar price gaps have been reported at racks across the state, including in the Bay Area, it said.

"California oil refiners are using their market power over their branded stations to force gasoline prices to consumers at the pump to rise at all gas stations," said Cody Rosenfield, co-author of the analysis. "Just as supplies began coming in from outside California to moderate supply problems driven by unprecedented refinery outages, oil refiners began using their price leverage over their branded stations to keep gas prices artificially high."

Consumer Watchdog said the market move appears to violate the Robinson-Patman Act—antitrust legislation written to protect businesses from arbitrary and unfair prices. It requires like and kind products to be offered at similar prices.

The analysis names Chevron Corp., San Ramon, Calif., Valero Energy Corp., San Antonio, and Tesoro Corp., San Antonio.

Focusing on Tesoro Corp., Consumer Watchdog said the price difference charged to ARCO stations appears to violate a deal made in 2013 with California Attorney General Kamala Harris when the company was allowed to purchase all of the Southern California ARCO stations from BP.

“We will not comment specifically on the allegations put forth by Consumer Watchdog; however, it is important to note that there are many factors that determine the price of gasoline,” Tina Barbee, spokesperson for Tesoro, told CSP Daily News. “These include the cost of crude oil, distribution and marketing costs, refining costs and federal and state taxes. The marketplace and market conditions, such as supply and demand, determine the price that consumers pay at the pump.”

Tupper Hull, spokesperson for the Western States Petroleum Association (WSPA), told The Los Angeles Times that Consumer Watchdog has made “numerous inflammatory and demonstrably inaccurate allegations this year” about fuel markets. “The petroleum industry on the West Coast has been the subject of dozens of investigations over the past few decades by organizations and individuals with far more knowledge and understanding of fuel markets than Consumer Watchdog, and none of those investigations have ever found evidence of anti-competitive conduct.”

According to a GasBuddy ranking in February 2015, ARCO, which operates in several Western states through 1,280 gas stations and convenience stores, ranked second in the gas-price monitor’s Top 100 Most Competitive Brands ranking with an average daily discount of 14.55 cents per gallon, which was 7.7% more aggressive than its discount in 2013.

Latest Videos

Latest Releases

In The News

Latest Report

Support Consumer Watchdog

Subscribe to our newsletter

To be updated with all the latest news, press releases and special reports.

More Releases