Consumer Watchdog: SoCal Oil Refiners Double Profits While Gas Prices Soar
LOS ANGELES (CBSLA.com) — The advocacy group Consumer Watchdog released an analysis on Wednesday that revealed record price spikes at the pump have doubled oil refiners profits.
According to the California Energy Commission (CEC), oil refineries profited 45-cents per gallon on Jan. 1. Profits then rose to $1.17 per gallon on July 1.
In fact, the average profit per gallon of gas in 2015 has nearly doubled at 88-cents from what it was between 1994 and 2014, according to the Los Angeles Times.
In response, Consumer Watchdog has called for lawmakers to take action and force refineries to open their books and justify their inventory.
"This historic pay day for refiners shows that they have every interest in keeping inventories low and pump prices high," said Cody Rosenfield, researcher for Consumer Watchdog. "The state needs to step in and require reasonable inventory levels to be maintained."
However, members of the Western Sales Petroleum Association (WSPA) said data provided by the CEC is a combination of all refining costs as well as profits, which makes it impossible to determine what portion of the costs are considered to be profitable. The organization expressed the information reported by Consumer Watchdog is being grossly misrepresented.
Troubles at the pump began in February when officials blamed low inventory to be the cause for a spike in gasoline prices.
On June 30, the advocacy group presented evidence to the California Attorney General that oil refineries were artificially manipulating gasoline prices.
"Oil refiners have kept the state running on empty and now they are sending fuel refined in California abroad right as the specter of low inventories in the state drives huge price spikes," said Consumer Watchdog President Jamie Court. "There is no good reason for the latest outrageous run up at the pump other than oil refineries manipulating inventories to drive gas prices artificially high."
"The current situation in Southern California, while painful for consumers, is consistent with the increased volatility that has been a feature in California for many years," added Tupper Hull, Vice President of Strategic Communications for WSPA. "Relative isolation from other refining centers in the U.S., a unique fuel blend, high taxes and environmental costs all make California prices generally higher than the national average and sensitive to short-term supply distributions."
Research has shown that low inventories and recent exports of California's refined supply to South and Central America have sent gasoline prices to a record gap with prices across the nation, according to the advocacy group.
Meanwhile, an Exxon Mobil refinery in Torrance continues to not fully operate following an explosion that occurred.
Consumer Watchdog went on to report that in California, only four oil refiners control 78 percent of the state's gasoline capacity.
On average, Los Angeles drivers are currently paying $4.24 per gallon for regular gas, which is about $1.50 more than the national average.