New Bill Seeks to Make Oil Refiners’ Profits Very Transparent
A local lawmaker is seeking to know why California gas prices are so much higher than the rest of the country in light of Russia’s invasion of Ukraine.
California’s high gas prices are resulting in record levels, but a lawmaker wants to know why prices are higher in Golden State than in the rest of the country.
Senate Bill 1322, Ben Allen, D-Redondo Beach, introduced an act requiring the state’s big oil refiners – Chevron, Marathon, PBF Energy, Phillips 66, and Valero – to disclose the cost of crude oil, the cost of converting it into gasoline, and the price of the gasoline they sell to the public.
Bill 1322 was introduced on February 18 and will first be heard by the Senate Energy Committee, Pasadenastarnews reported.
Allen joined with consumer advocates Friday at the Los Angeles offices of Consumer Watchdog to announce the new law. The law is called the California Oil Refinery Cost Disclosure Act.
‘Smoke and Mirrors’
“We ask the oil companies on behalf of California drivers: Let’s end the games of smoke and mirrors,” he stated.
“Open your books and show the public your true costs of doing business.”
Allen acknowledged that California’s stringent environmental standards and gas tax have raised fuel prices.
Prices had spiked following an explosion at an ExxonMobil refinery in Torrance in 2015, he said, and they haven’t fully recovered since.
“They went up to $1.50 a gallon after that explosion, but they only came back down $1,” he said.
“So there’s a 50-cent surcharge that oil companies have been profiting from ever since. We want to get to the bottom of that.”
The current California state excise tax per gallon is 51.1 cents, as is the federal excise tax of 18.4 cents, plus local taxes which range from 2.25% to 5.75%, according to the state Legislative Analyst’s Office.
Regulatory and Political Environments that are Strict
On Friday, representatives of the various oil companies could not be reached for comment. Nonetheless, Kevin Slagle, spokesman for Western States Petroleum Association, said the state’s high fuel prices can largely be attributed to its strict legislative and regulatory environment.
“The first $1.27 a gallon California motorists pay is for regulatory programs,” he explained.
“That’s why California has been at the higher end of gas prices for years.”
California is also a “fuel island,” according to Slagle.
“The oil we produce in California is refined in California, but that only accounts for about 30% of our needs,” he added.
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“The other 70% is imported from Ecuador, the Middle East, and other places around the world. The cost of shipping the crude oil raises the cost of gasoline.”
Despite California’s natural resources, Slagle believes it is nearly impossible to drill for oil in the state due to its political environment.
“There are more than 1,000 permits waiting for approval, but Gov. Newsom’s administration has essentially imposed a ban by not issuing drilling permits,” he added.
‘Charging Higher Prices’
A 2019 report published by the California Energy Commission concluded that the reason for rising prices in the state is “simply that California’s retail gasoline outlets are charging higher prices than those in other states.”
Gas prices in California were $15 billion higher than the nation’s average in 2018, and $11.6 billion higher over the past five years, the report said.
Jamie Court, consumer watchdog president, points to Chevron, Marathon, PBF Energy, Phillips 66, and Valero, all of which control 96% of the gasoline made in California.
“California has been an ATM for oil refiners for too long, it’s time to pull the curtain back and find out how much California oil refiners are making off every gallon of gasoline they sell and take back the excessive profits,” he continued.
Prices have risen well above $6 a gallon in Southern California due to the Russian/Ukrainian conflict.
Shell, Chevron, and Mobil stations in Los Angeles County charged between $6.49 and $7.35 a gallon on Friday.
California motorists, as a result, are paying way too much for gasoline.
“They’ve been ripping us off for too long,” he stated. “We even have a name for it — the ‘Golden State Gouge.’ “
CAL-PIRG director Jenn Engstrom said environmental regulations and taxes are only part of the reason why gas prices are higher.
“When there is so much fluctuation with gas prices, it’s important we have better transparency so we can call out oil refineries if they needlessly raise prices,” she added.