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Top Prop 23 Funder Doesn’t Want Greentech Competition To Get in Way of Profiteering

Santa Monica, CA – A new report by Consumer Watchdog's OilWatchdog.org project finds that Valero Energy reaped over $4.5 billion in refining profit while gouging California motorists since it bought its second California refinery in 2002. The oil refining giant, which is also the largest funder of Proposition 23, averaged 37% higher margins on each barrel of oil it refined in California than at refineries it owns elsewhere in the country, according to data published in company financial reports.

Top Prop 23 Funder Doesn’t Want Greentech Competition To Get in Way of Profiteering

Santa Monica, CA – A new report by Consumer Watchdog's OilWatchdog.org project finds that Valero Energy reaped over $4.5 billion in refining profit while gouging California motorists since it bought its second California refinery in 2002. The oil refining giant, which is also the largest funder of Proposition 23, averaged 37% higher margins on each barrel of oil it refined in California than at refineries it owns elsewhere in the country, according to data published in company financial reports.
 
See the full report and accompanying charts and data at http://www.OilWatchdog.org or download directly from: http://bit.ly/valeroprofits
 
The nonprofit, nonpartisan Consumer Watchdog said today that the Texas-based Valero reaped billions from its California operations while Californians were paying substantially higher gas prices than drivers across the country.
 
"Valero has made more money per barrel in California and gas prices have been higher here than the rest of the nation, said Consumer Watchdog Executive Director Douglas Heller.  "California has been a gold mine for Valero and it wants the gold rush to continue, by curbing green-tech competition and keeping prices at the pump as high as possible. "
 
According to the report:

*  Valero’s net refining margins in California have been 37% higher per barrel than those from its refineries in other regions since 2002.
*  Profits have been highest in California for the company during periods of steadily rising gasoline prices; Valero earned more than $1 billion in California refining profits in 2006 alone.
*  Higher than average gasoline prices in the West, created by artificially low supplies during periods of high demand, have been Valero’s recipe for big profits.
 
“Valero was not in the public consciousness until it started funding Prop. 23 this year, but it has been in our pocketbooks for almost a decade, making billions of dollars by gouging California drivers," said Judy Dugan, who directs Consumer Watchdog's OilWatchdog.org project.
 
Valero Counts On High Gas Prices In California
 
Valero's ability to exact outsized profits from California depends on high pump prices because, unlike integrated oil companies like Chevron, it doesn't extract crude oil, it only refines oil and sells its products at retail gas stations.  This means that refining margins are central to its profits.  During the recession, Valero has been selling off refineries in the Northeast, but has held onto its California refineries with the expectation that it will resume getting outsized California profits by keeping refined gas supplies tight and charging high prices for gasoline in the state.  
 
The report noted, however, the ability to tighten gas supplies in California – a key component of the price gouging strategy of Valero and other refiners as found in state investigations, lawsuits and Consumer Watchdog studies – could be limited by new environmental rules that support green alternatives to oil and less dependence on gasoline in California.
 
"In order to continue sending billions of dollars from California to Texas, Valero needs to ensure that nothing hampers refiners’ ability to short the market and gouge drivers," said Dugan.
 
The full report, Valero Energy and Its California Profit Pipeline, can be downloaded here: http://bit.ly/valeroprofits
The underlying data for the report is available here: http://www.ConsumerWatchdog.org/resources/ValeroProfitPipelineData.xls

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Consumer Watchdog is a nonpartisan consumer advocacy organization with offices in Washington, D.C. and Santa Monica, CA. Consumer Watchdog's OilWatchdog.org project publishes reports, news and analysis about the oil industry.