SACRAMENTO, Calif., Dec. 16, 2015 /PRNewswire-USNewswire/ — Consumer Watchdog today revealed to a state oversight panel new tactics by which California oil refiners had their most profitable years ever and state drivers paid more at the pump than ever before compared to US drivers.
The nonprofit group said that California drivers will have paid $10 billion extra for their gasoline by year’s end due to gouging based on an analysis of price and consumption.
Consumer Watchdog found that between February and November state drivers already shelled out $9.6 billion more than US drivers when gas prices spikes began. After taking out California’s slightly higher taxes, state drivers paid $8.1 billion extra at the pump, or $340 per driver, from February 1st to November 30th.
Consumer Watchdog testified before the California Energy Commission’s Petroleum Market Advisory Committee (PMAC), which was charged with creating solutions to gas price volatility. The non-profit revealed that even as gasoline supplies have stabilized oil refiners have used back door trades and inside information about competitor pricing to keep gas prices artificially high. Currently, average US gas prices are 75 cents less than LA’s and 65 cents less than California’s.
“By dumping cheap fuel in secret trades and artificially pumping up gas prices at their branded stations, oil refiners have raked in billions of dollars in unreasonable profits at Golden State gas pumps,” said Jamie Court, president of Consumer Watchdog.
Court testified that with gasoline inventories stable refiners have gamed the system by keeping transactions involving cheaper gasoline hidden from the rest of the market and using contractual power over branded gasoline stations, 80% of the market, to inflate pump prices by 30 cents or more.
See the slide presentation at: http://consumerwatchdog.org/resources/consumer_watchdog_presentation.pdf
The elements of the scheme involve:
1. Not allowing the stations owners to see competitive prices by selling, for the first time in history, through secret deals to the small unbranded market (20% of stations) at prices that are 20 to 30 cents less than the public “rack” price.
As a result:
2. In the majority branded market (80% of stations), refiners manipulate contracts to keep retail prices artificially High
3. By covertly sharing pricing data, refiners collude without overt communications:
The result is profits from oil refining in California that have never been before. California’s three largest refiners, Tesoro, Valero & Chevron had their best quarters ever in California in the third quarter of 2015. Tesoro made four times more than the same quarter last year, Valero made twelve times more.
Consumer Watchdog recommended to the panel greater transparency:
“If all market players have the same information, the market cannot be gamed,” said Consumer Watchdog researcher Cody Rosenfield.
Consumer Watchdog also recommended that the CEC should receive and publish data on following aspects of the refining industry:
SOURCE Consumer Watchdog