By JW August, TIMES OF SAN DIEGO
September 1, 2022
New Legislation Will Force California Refineries to Reveal Profit Margins
Gas prices may be tumbling now but history has shown that once there’s any disturbance in the market, the prices will start climbing yet again.
But the next time it happens, California drivers will know which companies are making big profits during the run-ups at the pump — and how much they are making.
This week the state Legislature passed Senate Bill 1322, which requires refineries to disclose every month the price they pay for crude oil and the profit margins they make on the gasoline they refine. Existing laws made the information confidential by default but no longer.
The bill, authored by Sen. Ben Allen of Santa Monica, is awaiting Gov. Gavin Newsom’s signature. The hope is that the revelations and the resulting publicity might force the industry to reconsider what many say are excessive profits they are reeling in. Some suggest it could possibly spur even tougher legislation.
The Western States Petroleum Association believes the legislation is unnecessary. Spokesman Kevin Slagle said the California Energy Commission “already collects extensive data from California fuel market participants. The Attorney General already possesses the authority to oversee anti-competitive action by industry and to protect California consumers.”
The Petroleum Association represents companies that do the majority of exploration, production, transportation and marketing in Arizona, Nevada, Oregon, Washington and California.
Jamie Court of Consumer Watchdog countered that Slagle has it wrong.
“The California Energy Commission does not currently receive data about actual crude oil costs for the refiners,” he said, adding that “the legislation and resulting data will pull the curtain back on what is really happening with California refiners.”
He goes on to explain the current published information is a “guestimate” and “does not take into account that oil refiners buy crude cheap on long-term contracts and make a killing when the world price of crude spikes like it did this year.”
Consumer Watchdog, which advocated for the legislation, said 97% of the gasoline in California is produced by five big oil refineries. It crunched the numbers and found the refineries “made from three to 10 times more in profits per gallon off of West Coast operations from April through June than they did in the same period last year,” according to Court.
Patrick De Haan, head of petroleum analysis for price database GasBuddy, is quoted on his website as saying that “we’ve never seen anything like 2022 at the pump, highlighted by once-in-a-lifetime events including the ongoing COVID-19 pandemic, which caused myriad imbalances, exacerbated by Russia’s war on Ukraine.
He believes drivers aren’t out of the woods yet because prices will rise again “should something unexpected develop.”
Using real-time information from more than 150,000 stations, the website reports the lowest prices can be found in Arkansas ($3.32), Mississippi ($3.34) and Texas ($3.34), while the highest prices are in Hawaii ($5.26), California ($5.22) and Nevada ($4.85).
Three years ago the California Energy Commission found that when compared to the rest of the country, in-state consumers were estimated to have paid an additional $11.6 billion over the last five years. At that time Newsom called for an investigation by the California Attorney General’s office.
The results of the investigation have not been made public.
