SANTA MONICA, Calif., Aug. 4, 2016 /PRNewswire-USNewswire/ -- Consumer Watchdog pointed today to big new California oil profit reports, gasoline pricing data and a candid remark from a refinery CEO to show that the companies are making unreasonable profits from California drivers due to their market power and anti-competitive practices.
Today oil refiner Tesoro reported $332 million in profits from California oil refining during the second quarter. Valero had reported $141 million in state oil refining profits during the second quarter, nearly triple its average quarterly profit of $57 million. These are the only two refiners that report California-only oil refining profits.
Consumer Watchdog said the high profits from the state refiners that report them helps to explain the odd, extreme current gap between retail and wholesale gasoline prices in the state.
Currently, California's wholesale market for gasoline, where oil refiners trade gas, is the cheapest in the country, but California drivers have been paying the highest price in the nation for a gallon of gasoline on the street.
The price of gas at the pump in California usually costs 88 cents more than the price on the wholesale market. Today, drivers are paying $1.58 more than the wholesale market, a windfall for refiners, who are pocketing most of that extra cost.
See Consumer Watchdog's Presentation here: http://www.consumerwatchdog.org/resources/wholesale_press_conference.pdf
"With all of California's refineries back online, drivers should be paying 70 cents less at the pump," said Consumer Watchdog researcher Cody Rosenfield. "There's no shortage. There are no refinery problems. Where are the savings for consumers?"
On the California wholesale "spot" market where refiners trade large amounts of gasoline, a gallon costs $1.17, the lowest in the country, and 18 cents less than in Chicago, due to an overabundance of supply. Despite that, street prices in California are 45 cents more per gallon than in Chicago.
Consumer Watchdog is providing this evidence to the California Attorney General's office in support of its ongoing investigation into California gas price manipulation, where subpoenas have recently been issued. The difference between the spot price and the retail price is the larger than its ever been – excluding October of 2008, during the market crash.
On a recent investor call, California's newest refiner made some startling admissions that help explain last year's record gasoline price gap with American gas prices -- $1.60 cents more.
Consumer Watchdog pointed to the remarks of Tom Nimbley, the CEO of PBF Energy, the company that purchased the troubled Torrance refinery from ExxonMobil. During an investor call on July 29th, in response to a question about why the Torrance refinery had so many issues, Nimbley said that Exxon's equipment was top notch, but the problem was Exxon's culture. He said, "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," suggesting that Exxon intentionally kept the Torrance refinery, which supplies 20% of Southern California's gasoline, offline.
Nimbley also admitted he and others in the industry were going to cut back on refinery operations to limit supply and inflate prices. He said, "bottom line is there's too much clean product and the only way you can solve that problem is reducing the amount of clean product that you make."
To read the full transcript and download the recordings please go to our website at www.consumerwatchdog.org.
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SOURCE Consumer Watchdog