Oil Refiners Take Home $1.01 Per Gallon In Gross Profits In May; $1.05 On Retail Sales, Says Consumer Watchdog

SACRAMENTO, Calif., July 24, 2025 /PRNewswire/ -- California oil refiners' profits per gallon grew in May to top $1 per gallon, according to new data posted by the California Energy Commission (CEC). 

The CEC reported oil refiners' gross margins growing from 43 cents per gallon in January to $1.01 per gallon in May and the retail margin, what refiners take home just from retail sales that exclude wholesale sales among traders and refiners, climbing to $1.05 per gallon.

The refining margin now accounts for 23% of what drivers pay at the pump, with the distribution margin adding another 15% to the cost. Together the overhead and profit for the industry, the margin for refining and distribution, accounts for 38% of the cost of a gallon of gasoline, while crude oil accounts for only 35% of the cost. Meanwhile, state taxes, which fund road maintenance, and environmental fees account for 23% of the pump price.

"The lion's share of what California consumers are paying for gasoline is going straight into oil refiners' pockets," said Jamie Court, president of Consumer Watchdog. "This is a hugely profitable industry and Sacramento needs to take heed of this before giving away more handouts to the industry in the last month of the legislative session. $1.75 of every gallon of gasoline sold goes to the refiners and retailers. These margins are greater than anywhere else in the country or world. These escalating margins should be a warning sign for Sacramento not a cause for appeasement."

In its profits call with shareholders today, the Valero Energy CEO said tight inventory would continue to drive higher profits. "Refining margins were supported by strong product demand against the backdrop of low product inventories globally," CEO Lane Riggs said on the call.

Consumer Watchdog commended the Energy Commission for trying to find a buyer for Valero's Benecia refinery, acknowledging the successful efforts by former Attorney General Bill Lockyer and Senator Barbara Boxer two decades ago to find a buyer for the Flying J refinery that closed in Bakersfield.

"Refiners will shut down profitable refineries because they know that they can make more money by making less gasoline," said Court. "It is the job of the state to hold them to account and make sure that useful assets are not put out to pasture before their time. State lawmakers would do well to understand these dynamics, proven time and again by the refiners' cartel that dominates gasoline production in the state. If the current closures happen, 4 refiners will make 98% of California gasoline by April of 2026. This gives them power to squeeze consumers. It's also the reason the Energy Commission needs to finish its price gouging penalty rule and make sure there is a penalty when they do squeeze us."

Energy Commission data, produced under Senate Bill 1322 (Allen), shows gross refining margins – the profits indicator for refiners – at 43 cents in January, 80 cents per gallon in February, 75 cents per gallon in March and 97 cents per gallon in April.

The gross margins are what the refiners keep after the cost of crude oil, environmental fees, and taxes are deducted. The only refiner cost included in the gross margin is the operating costs for the refinery, which are reported by the refiners to the SEC at about 20 cents per gallon.

Read the Energy Commission's retail price breakdown for May: https://www.energy.ca.gov/estimated-gasoline-price-breakdown-and-margins

SOURCE Consumer Watchdog