Lucas of Vitol went on to describe how lack of information about the refinery coming back online extended the price spike by pushing imports away, "One of the reasons why in my opinion was a lack of transparency with what was going on with Torrance, because remember when it first blew up back in February, there was like an eternal, rolling, one month period when they were going to get up and running, and they kept saying, 'next month', 'next month', 'next month'."
Vitol's statements about ExxonMobil's involvement in the price spike come after another refiner criticized Exxon's participation in the price crisis. Just weeks ago, PBF Energy CEO Thomas Nimbley, whose company just purchased the Torrance refinery, stated on the company's second quarter investor call, "I personally believe Exxon probably had made a decision that they were not going to run a single refinery operation in the state of California."
At yesterday's meeting, Consumer Watchdog, staff of the Air Resources Board, and committee members acknowledged also, however, that supply shortages were not the the main cause of sustained higher California gas prices, but rather retail pricing by oil refiners who exert control over branded pump prices. In times of ample supply, refiners use their pricing power to keep prices unduly high. The five-member committee agreed the next meeting should focus on the topic.
Consumer Watchdog has raised the issue of market power in California gas pricing at prior meetings. In June of last year, Consumer Watchdog revealed evidence showing that refiners were taking advantage of their contractual power to keep street gasoline prices high. Branded stations are forced to pay whatever price the oil refiner decides to charge them. Because nearly 80% of Southern California's stations are branded, this system keeps gas prices in the state perpetually high. Many branded stations are charged 30 cents more than their independent counterparts for a gallon of the same gasoline.
See Consumer Watchdog's Presentation yesterday here: https://www.youtube.com/watch?v=hJV_fuk9XhY
Consumer Watchdog President Jamie Court presented to the committee, saying, "In California the laws of supply and demand have been suspended." He pointed out that recently California has had the lowest wholesale gas prices in America, the spot price refiners pay to each other, but the highest retail prices paid at the pump.
Committee members acknowledged Consumer Watchdog's concerns. Kathleen Foote, the California Attorney General's Anti-Trust chief, is a member of the committee. Her office is said to be investigating the price spikes. Foote stated, "I find myself wondering if the source of the disconnect is simply the fact that all the retail outlets are owned by the majors."
Committee Chairman Severin Borenstein was talking about the ability of California's oil refiners to charge higher gas prices to their branded stations due to market power when he stated, "Consumer Watchdog has convinced me that this could be a piece of the puzzle, and we should be looking more into it."
The Air Resources Board presented testimony that wholesale prices did not correlate with retail prices. Comparing 2015 & 16 to prior years, Deputy Executive Director Edie Chang put profits as the cause of California's high prices, "There are some differences in spot prices, some differences in taxes & fees, but a fair amount of difference in terms of the revenue piece."
Consumer Watchdog said the state's approval of the 2013 acquisition of BP's refineries and ARCO branded stations by Tesoro are to blame for the current pricing problems. Two refiners, Tesoro and Chevron, now control 56% of refining in the state. Tesoro, despite pledging to the California Attorney General to continue supplying ARCO as the low-priced gasoline leader, has charged ARCO branded stations 30 cents more than it charges unbranded and independent stations.
"The Attorney General's approval of Tesoro's acquisition of BP's assets doomed California to higher price gasoline," said Court, whose group urged Attorney General Harris to oppose the consolidation in 2013.
Consumer Watchdog has the full audio & video of the PMAC proceedings for reporters needing quote verification.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/gasoline-trading-company-vitol-blames-exxonmobil-misinformation-for-california-2015-gas-price-spike-governors-committee-turns-to-retail-price-manipulation-as-cause-says-consumer-watchdog-300315119.html
SOURCE Consumer Watchdog