Gas Prices Flatten, But Group Says Oil Companies Gouge Drivers

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Gasoline prices in the Bay Area have flattened out after a recent price spike that prompted a consumer group to claim Tuesday that oil companies in California have taken advantage of the fuel markets to gouge consumers.


Recent spikes in gasoline prices that occurred during the first three months of this year coincided with a geyser of profits for at least two oil companies in California, Valero and Tesoro, according to a study by Consumer Watchdog.


"The refiners' costs are stable, but they are gouging on the prices they charge at the gas station," said Liza Tucker, a consumer advocate with Consumer Watchdog who is the co-author of the new report. "We're not saying that oil companies can't make a profit but we are saying that they can't gouge consumers."


Consumer Watchdog claimed that California motorists are being gouged at the pump to the tune of $1 billion a month.


The recent jump in gasoline prices is the result of market forces, said Braden Reddall, a spokesman for San Ramon-based Chevron.


"There has been a squeeze on supply," Reddall said. "There was a strike at one of the oil refineries in the state, and at another, a fire. Plus, you see a switch from winter blend to summer blend. There has been a squeeze on supplies in recent months."


Tesoro shut down its refinery near Martinez in February after unionized oil workers walked off the job during a strike, and during the same month, Exxon suffered an explosion and fire at its refinery in the town of Torrance near Los Angeles, which knocked that fuel factory offline.


"We want the Legislature to find out what can be done to make California a competitive market," said Cody Rosenfield, a consumer advocate with Consumer Watchdog. "Right now it's not a competitive market. It's an oligopoly."

Although gasoline prices — until Tuesday — had been rising, they nevertheless have jumped to a lesser degree than average prices statewide, the GasBuddy survey found.

The average price of unleaded gasoline was $3.72 in the Bay Area, $3.68 in Santa Clara County, $3.67 in the East Bay, and $3.81 in the San Francisco-San Mateo-Marin area. Those prices were all about 25 cents above the average prices from a week ago.

Gasoline prices in the Bay Area are up about 7.1 over the last week, compared with an 8.3 percent rise in California. Statewide, the average price is up 28 cents.

The trend of price spikes that have correlated with profits for oil companies in California has been going on for 10 years, the consumer group said, pointing to oil companies Tesoro and Valero in particular.

Consumer Watchdog demanded that broader regulations be imposed on oil companies operating in California.

"The incentive of the oil companies is to keep the current system of low inventories, downed refineries, and little transparency," the report concluded. "Governmental intervention is the only hope for changing a system that's been tilted against drivers for the last decade."

Chevron noted that provisions of California's greenhouse gas regulations that went into effect on Jan. 1 have added 10 cents a gallon to gasoline prices.

"California has become a fuel island," Reddall said. "It is a regulatory decision to blend gasoline to a certain standard. The gasoline product in the state is not as fungible as it would have been under normal circumstances."

Contact George Avalos at 408-859-5167. Follow him at

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