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Santa Monica, CA --- California drivers paid $1 billion extra at the pump in March, when compared to the national average gas price charged to U.S. drivers, according to an analysis of the latest government data by Consumer Watchdog.

The nonprofit consumer group said refiners continued to reap a windfall in the wake of refinery shutdowns in February, driving prices at the pump artificially high, a situation exacerbated by low gasoline inventories in the state.  

“Oil companies keep California running on empty so that when a refinery goes down gasoline prices go way up,” said Jamie Court, president of Consumer Watchdog. “In March the average Californian had to work almost two extra hours to pay for higher California prices. With crude prices at historic lows and national gasoline prices stable, California oil refiners need to answer for the $1 billion extra they charged last month. The legislature should demand that the companies explain their billion dollar bonanza.”

Consumer Watchdog’s analysis of Energy Information Administration gasoline prices found:

•    In March, California averaged 84 cents higher than the national average of $2.54 per gallon, or $3.38 per gallon in the state.

•    As a result, Californians spent $1,046,772,798 more for their gasoline in March than US drivers.  The gas price gap with America grew to over $1 billion in March from $550 million in February.

•    The added cost to California drivers from the gap was $34 million per day extra, or $43 dollar per driver, in March (nearly twice the average California wage of $25 per hour).

•    Oil companies often argue that higher prices are due to California’s higher taxes, but when factoring for them (15 cents over the US average according to the American Petroleum Institute), Californians still paid an extra $860 million in March.

•    In the first quarter of 2015, the gap between US and California prices cost drivers nearly $2 billion more ($1.98 billion).  Subtract higher taxes in California, the gouging gap remains $1.45 billion more than US gasoline prices.

In a letter to state senate leaders last week, Consumer Watchdog and Tom Steyer called for oil companies to be compelled to testify about recent gasoline price spikes, by subpoena if necessary.  Read the letter at www.consumerwatchdog.org/resources/cwnextgenltr.pdf

Steyer, a business leader, philanthropist and climate activist, and Consumer Watchdog called on Senators to compel oil industry executives to answer four questions:
 
1.     Why did Tesoro tell investors that the company could continue operating refineries indefinitely even with the steel worker strike, yet shut down its refinery, precipitating the price spike?
 
2.     Why didn’t the refineries act more quickly to increase supply when it became clear that prices were going to spike?
 
3.     Why do refiners keep so little inventory on hand compared to the rest of the country? Why should they not be required to keep the same amount as the national average?
 
4.     Why won’t refineries publicly disclose real-time information about their operations and outages?
 
“If oil company executives refuse an invitation to answer these and other questions, we urge you to use your subpoena power to compel them to testify,” wrote Steyer and Court.

The California Senate held hearings on the price spikes one week earlier, where oil companies refused to testify.  The Senate presented California Energy Commission data showing that crude prices were cut in half from last year and refiners were gobbling up the savings that should have gone to consumers with the current gasoline prices in California.

 


In conjunction with its testimony, Consumer Watchdog released a report, “Price Spiked: How Oil Refiners Gouge Californians On Their Gasoline and What It Costs.’”  Read the report at: http://www.consumerwatchdog.org/resources/PriceSpiked.pdf

The report found that the major factor contributing to the price increases was scarce gasoline supply. California refiners keep only 10.7 days of gasoline supply on hand and stored in terminals compared to the nationwide average of 18 days.

“California’s system is structured for volatility so that refiners can capitalize on slowdowns or shutdowns in gas production,” said Cody Rosenfield, who co-authored the report. “The way they do that is to keep inventories low so prices will skyrocket with even the smallest hiccups in production.”
 
Consumer Watchdog’s analysis utilized monthly gas prices from the Energy Information Administration, and a five-year average of March California gasoline consumption from the state Board of Equalization.


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