Californians Paid $550 Million Extra During February's Gasoline Price Spike; Watchdog Report Finds Low Inventories & Profiteering Drive Gasoline Price Spikes

SANTA MONICA, Calif., March 24, 2015 /PRNewswire-USNewswire/ -- At a California State Senate hearing on February gasoline price spikes, Consumer Watchdog issued a report finding that California oil refiners have about half as much gasoline on hand than the rest of America, creating a volatile market that leads to gasoline price spikes.

The report, "Price Spiked: How Oil Refiners Gouge Californians On Their Gasoline and What It Costs," showed that Californians paid $550 million extra for their gasoline in February compared to drivers nationwide by calculating the difference between US and state prices and allotting for consumption. 

On Monday Californians paid 84 cents more per gallon than the rest of the nation for their gasoline.

"Oil refiners are gouging Californians by keeping the state running on empty so that when refineries go down gasoline prices shoot up," said Jamie Court, president of Consumer Watchdog. "It's time for the legislature to require that oil refiners keep another week of gasoline inventory on hand to avoid perennial price spikes in the third largest gasoline consuming economy in the world."

Read the report at:  http://www.consumerwatchdog.org/resources/PriceSpiked.pdf

A review of ten years of data collected by the federal and state government found:

• California gasoline prices have averaged 32 cents more per gallon than the national average for gasoline prices over the last decade: $3.30 in California vs. $2.98 in the rest of the nation.
• Californians paid $47 billion extra, or $13 million dollars per day more, due to the extra 32 cents per gallon charged in the state, over the last ten years.  This amounts to $1,999.89 per licensed driver in California (24 million).
• While the rest of America averaged 18 days of gasoline supply in refineries and bulk terminals, California refiners only kept 10.7 days of gasoline supply on hand  (48% less) – making the system vulnerable to price spikes when refineries experienced problems, as two refineries did recently.
• Generally, gasoline prices in California have spiked as days of supply on hand (inventories) have dropped. State gasoline price spikes over the last ten years are typically precipitated by major refinery problems.
• Refinery consolidation, identified as a source of higher prices in the 1999 California Attorney General Gas Pricing Taskforce's report, has worsened with two refiners – Chevron and Tesoro – controlling 55% of the market. Four refiners control 76% of the market.
• Lack of transparency about refinery outages and real time information about inventories, which lags by 3 months, makes it difficult for policymakers and regulators to take action when events occur.
• Chevron, the largest refiner in the state, saw steep increases in its profits from downstream operations (refining, marketing and transportation as opposed to drilling and crude oil operations) that mirrored many of the gasoline price spikes.  Chevron's profits were escalating in the fourth quarter of 2014 even as gasoline prices fell– suggesting a huge windfall for the company from the latest gasoline price spikes.

Consumer Watchdog's report recommends:

• Greater transparency and accountability for refiners:  California should publish refiner maintenance schedules, outages, and accidents in real time, and ask refiners to publicly disclose weekly supply figures.
• The state should require refiners to keep another week's worth gasoline supplies on hand so that it matches national days of supply.
• The state should accelerate the transition to alternative transportation technologies such as electric vehicles.

Visit our website at: http://www.ConsumerWatchdog.org

SOURCE Consumer Watchdog

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