Santa Monica, CA — Consumer Watchdog delivered a report today to a state panel finding that California’s largest oil refiners calibrated imports and exports of gasoline to artificially inflate gasoline prices during the first nine months of 2015, when gas prices were consistently $1 per gallon higher than the nationwide average.
The report, “Against the Tide: How Missing Tankers Pumped Up Gas Prices and Refiner Profits,” was presented at the California Energy Commission’s Petroleum Market Advisory Committee, charged with investigating market manipulation. It can be read at www.consumerwatchdog.org/resources/reportagainstthetide.pdf
The study of public and private shipping data found that following the loss of 800 million gallons of gasoline from its felled Torrance refinery Exxon imported merely 12 million gallons of gasoline, parking its flagship tanker in Singapore for months rather than refueling the market. During the height of the summer price crisis, Chevron exports increased to further dry up tight supplies and drive up pump prices.
Consumer Watchdog also found that lack of accurate, real-time information about imports and exports created unnecessary volatility in gasoline prices. Refiners hid imports and exports from view of the market in order to command higher prices.
“Californians paid $10 billion more than US drivers at the pump in 2015 and the state’s oil refiners made record profits because Exxon and Chevron played hide and seek with our gasoline,” said Jamie Court, president of Consumer Watchdog. “It’s time that the state require real-time full disclosure of tankers' movements, gasoline trades, and inventory levels.”
“The data and report paint a troubling picture of a dysfunctional market where refiners can jack up wholesale and retail gasoline prices by failing to adequately disclose shipments,” wrote Cody Rosenfield, author of Consumer Watchdog’s report.
The report found that during the first nine months of 2015:
• While Exxon’s only California refinery was offline for 7 ½ months, the company imported just twelve million gallons of gasoline. The amount is equivalent to just three days worth of production at their Torrance refinery. The company purchased gasoline from other California refiners instead of resupplying the market.
• Exxon’s U.S.-flagged tanker, “S/R American Progress,” that is able to move product between United States ports, was idling off of Singapore for two months during the peak of the summer price crisis. The tanker didn’t ever deliver gasoline to California, though it could have picked up California-grade gasoline in Singapore, where Exxon controls one of the largest refineries in the world. The ship arrived and left Los Angeles without unloading. The industry news service Platts confirmed Exxon only imported product when desperate to meet contractual obligations, essentially drying out the gasoline market.
• Of the major refiners, Chevron exported 65% of the gasoline and additives that left the state, over 250 million gallons. When imports ceased prior to the July price spike, exports increased and eight of the twelve exporting ships were carrying Chevron gasoline. Chevron controls 28% of refinery capacity in the state.
• The industry’s excuse for not importing gasoline, the need to use “Jones Act” ships that fly U.S. flags to import from other U.S. ports, is a straw man as prices for the vessels were 20% cheaper than the year prior, and were widely available.
• Of the 95 confirmed imports and exports of gasoline and additives to and from California, the ship-tracking industry was aware of just 11 of them – just over 10% of shipments. This “dark” market created huge volatility in gasoline prices and unprecedented profits for oil refiners.
Consumer Watchdog obtained data from the California State Lands Commission for this report. The detailed state data shows every stop at an oil terminal by any vessel – and the product that was loaded or discharged. This after-the-fact information was compared to real-time market reports from ship tracking and financial services.
The study concludes: “Oil refiners should be required to have an inventory plan that accounts for losses of production with new imports to match lost production rather than drying the market, as Exxon did. All imports, exports and trades should be publicly disclosed in real-time to allow for adequate supplies and stable prices in the California market.”
Record Oil Refiner Profits in 2015: While only two companies provide California specific profit information in their annual reports – they had their best years ever. The state’s second largest refiner, Tesoro, made $1.9 billion on California refining, their best year ever by over a billion dollars. Fourth largest refiner Valero reported $852 million in California profits, more than triple their average profits over the last five years. Chevron, while they do not provide state-specific information, made $3.1 billion refining in the United States in 2015 – with over half of their production in California, a large portion of that is from California drivers. It was Chevron’s most profitable year for refining in the United States.
UPDATE: ExxonMobil responded to this report, and produced this statement. Consumer Watchdog responded on February 10th with this letter to the CEO of Exxon. On February 19th, Exxon provided a responding letter.
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