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Watchdog: California Drivers Being Gas-Gouged On 'Unprecedented' Scale In 2015

UPI
http://www.upi.com/Top_News/US/2015/08/06/Watchdog-California-drivers-being-gas-gouged-on-unprecedented-scale-in-2015/7011438843206/

LOS ANGELES, Aug. 6 (UPI) -- California gas prices are typically among the most expensive in the nation, but a consumer advocacy group on Wednesday called for legislation to put a stop to what it says is major league price-gouging -- to the tune of nearly $5 billion so far this year.

At a news conference Wednesday, Consumer Watchdog outlined what it called "unprecedented" price gouging in the Golden State during the first half of 2015 -- a time when the rest of the United States was enjoying a steep decline in pump prices.

"There has never been this type of gouging," Consumer Watchdog President Jamie Court said during the news conference, adding that the "California experience in gasoline prices is unprecedented."

"Californians are now paying $1.30 in L.A. above what the rest of America is paying for their gas," Court stated, citing a comprehensive new analysis the group released Wednesday.

The group, which includes billionaire environmentalist Tom Steyer, criticized the oil industry and said it has overcharged California drivers by billions -- $1.2 billion in July alone and $4.8 billion between Jan. 1 and July 31.

"The oil refiners are making historic profits and they are shipping gasoline out of California to foreign countries at a time when they are reporting shortage here at home," Steyer said in a report by CBS Los Angeles.

The group said drivers in other states, at times this year, were paying as much as $1.50 per gallon less than California drivers were. In mid-January, some states saw gas prices well under $2 per gallon -- like Missouri's average of $1.77 per gallon on Jan. 12 while California's was $2.60, the fourth-highest in the United States.

Consumer Watchdog placed much of the blame on refineries, accusing them of taking advantage of consumers by keeping prices -- and profits -- high despite a substantial decline in the cost of crude oil.

Last month, the California Energy Commission calculated a record profit margin of $1.61 for each refinery gallon that's ultimately sold at the pump -- despite the fact that the average margin over the last 15 years is 48 cents, the group said.

The advocacy group's report also pointed out that the second quarter profit for Valero, one of the state's largest gasoline retailers, skyrocketed by $270 million over the same quarter a year ago -- an 11-fold increase. Chevron, California's largest refiner, saw a $214 million profit increase over the same period.

Wednesday, Consumer Watchdog called on the California Legislature to take action.

"We need new laws to stop the California gouging, and we are very grateful that Tom Steyer is stepping up to flex his muscle to help secure new standards to protect Californians' wallets," Court said. "Oil refiners are getting rich off Californians pain at the pump and its time they pay a price for their profiteering at Californians' expense."

The oil industry, however, is pushing back against the accusations -- calling them part of a disinformation campaign -- and stated that the price differences are due to California's unique market conditions and tough regulatory climate.

"Volatility is likely to be a feature of California fuel markets for many years to come as the state continues to adopt increasingly stringent regulations that further isolate California from other fuel markets," the Western States Petroleum Association said in a statement. "As aggravating as these price spikes are for consumers, they indicate a highly competitive California fuels market driven by the laws of supply and demand."

"It is clearly misleading to focus on one part of the results from one part of the business from just one quarter," Chevron spokesman Braden Reddall said in response to the watchdog's report.

Thursday, AAA listed the national average for regular grade gasoline at $2.62 per gallon. California's average was listed at $3.66 per gallon.