While Drivers Shell Out on Gas, California Oil Refineries Pocketing Record Amounts of Money in 2015

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While Southern California drivers have seen average gas prices suddenly spike close to $5 per gallon this summer, the state’s oil refineries have seen record profits, according to the Los Angeles Times and a consumer advocacy group.

Newly available data from the California Energy Commission shows refiners saw a record high return to $1.17 per gallon this May.

That’s compared to an average margin of about $0.49 per gallon from 1999 to 2014, according to commission data cited by the Times.

A graphic showing refiner margin (including costs and profits) shows California Energy Commission data from 1999 to summer 2015. (Credit: Consumer Watchdog)

A graphic showing refiner margin (including costs and profits) shows California Energy Commission data from 1999 to summer 2015. (Credit: Consumer Watchdog)

The amount of profit doubled from Jan. 1 to July 6, the Times reported.

“Is it unusual? Absolutely,” Gordon Schremp, a senior fuels specialist at the California Energy Commission, told the newspaper. “They are making more money. And yeah, consumers are, unfortunately, having to pay significantly more.”

The data was highlighted in a report from Consumer Watchdog, a Santa Monica-based group that advocates for taxpayers often regarding insurance, health care and energy issues. According to the nonprofit, the state had stopped making the profit margin data available online in August 2014, but a page with the figures was recently restored after a Public Records Act request.

The data provided breaks down the total cost of a gallon of fuel, with one of the categories being refiner margin, which includes refinery operating costs as well as profit. The margin is calculated by subtracting the market price for crude oil from the wholesale price of gasoline.

The most recent data available shows that on July 6, the average price for a gallon of branded gasoline was $3.432. The refiner’s profit margin was $1.166.

A Chevron gas station near Union Station in downtown L.A. was charging more than $5 a gallon for gasoline on July 13, 2015. (Credit: KTLA)

A Chevron gas station near Union Station in downtown L.A. was charging more than $5 a gallon for gasoline on July 13, 2015. (Credit: KTLA)

Consumer Watchdog noted that gas prices in the Los Angeles region are currently about $1.50 per gallon higher than the nationwide average, “by far the largest gap in recorded history.”

Prices in the Los Angeles-Long Beach area were $4.245 for a gallon of regular on Wednesday, according to AAA. Nationwide, the average was $2.746 per gallon.

Across California, the average cost for a gallon of regular was $3.897 this week, according to the energy commission.

That gap was due to low inventories and recent exports of refined gasoline supply from California to South and Central America, according to Consumer Watchdog.

“This historic pay day for refiners shows that they have every interest in keeping inventories low and pump prices high,” said Cody Rosenfield, a researcher with Consumer Watchdog, in a news release. “The state needs to step in and require reasonable inventory levels to be maintained.”

At a news conference on the group’s report Wednesday, Rosenfield showed charts comparing what Californians pay to what other states pay.

“Californians are being completely, completely ripped off,” Rosenfield said.

Inventories have been below normal since August 2014, the group stated, again citing energy commission data.

Consumer Watchdog has called for a “windfall profits tax,” saying the state should force oil refiners to open their books, and justify their inventories and profits.

A spokesman for the trade group that represents refiners told the Times that operating with complete transparency would allow the kind collusion that oil companies are already being accused of.

Tupper Hull, a spokesman for Sacramento-based Western States Petroleum Association, said Consumer Watchdog’s interpretation and the state’s calculation of refinery margins was overly simplistic.

Supply and demand, Hull said, is leading to cost spikes.

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