ALERT: LA Gas Prices Jump 17 Cents, Largest Overnight Spike in Two Years, as Consumer Watchdog Calls for Senate Subpoena of Tesoro CEO

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Feb 27, 2015, 07:24 ET

SANTA MONICA, Calif., Feb. 27, 2015 /PRNewswire-USNewswire/ -- Gas prices have jumped up 80 cents a gallon in California since refinery shutdowns and slowdowns began on February 1, and 17 cents in Los Angeles overnight, making just announced California Senate hearings even more urgent, Consumer Watchdog said today.

"There is just no good explanation for why consumers are paying this much at the pump," said Consumer Watchdog President Jamie Court. "When there are shutdowns, refineries make money hand over fist and now we have a much needed investigation into whether this could be the result of artificial supply manipulation. Oil company executives should be subpoenaed to answer for these outrageous price spikes."

Refineries in the state have great market power because they keep a small supply of our special blend of fuel. California keeps less than half the days of refined gasoline supply on hand from the rest of America—10 days versus 24 days, according to the California Energy Commission. And refineries do not stagger periods of maintenance when operations are not running at full tilt.

On February 1, when the nationwide steelworkers strike loomed, Tesoro announced that it would close down its Martinez refinery for "safety" reasons, rather than leaving it running at half capacity while it performed seasonal maintenance. But at an investor conference in mid-February, CEO Geoff Goff assured investors, "We can keep running with the staffing levels that we have…for a very long time."

"Contract workers have been available to fill in at refineries on strike, including Tesoro's refinery in Carson, and skilled retirees can also be brought in to run what amounts to a giant pressure cooker," said Consumer Advocate Liza Tucker. "Once a refinery gets going, the conventional wisdom is it doesn't take that much to keep it going. The Senate needs detailed answers to a question for Geoff Goff—why did you need to shut that refinery down if you are telling investors refineries can keep going with lower staff levels indefinitely?"

Senate Pro Tem Kevin de Leon's announcement of hearings came in response to Consumer Watchdog's repeated urging that state officials investigate refineries for price manipulation. California's Attorney General and other state officials have not yet responded to the group's request.

SOURCE Consumer Watchdog