Bill seeks earnings transparency from California oil refiners – Daily News
Russia’s invasion of Ukraine has pushed California’s already high gas prices to record highs, but a local lawmaker wants to know why Golden State prices are routinely so much higher than the rest of the country.
Senate Bill 1322drafted by State Sen. Ben Allen, D-Redondo Beach, would require the state’s big five oil refiners – Chevron, Marathon, PBF Energy, Phillips 66 and Valero – to disclose the monthly cost of crude oil they they buy, what they pay to convert it into gasoline and how much they sell.
Allen joined consumer advocates Friday at the Los Angeles offices of Consumer Watchdog to announce the new legislation, also known as the California Oil Refinery Cost Disclosure Act.
‘Smoke and Mirrors’
“We’re asking the oil companies on behalf of California drivers: end the smoke and mirror games,” he said. “Open your books and show the public your true costs of doing business.”
Allen conceded that California’s tough environmental standards and voter-approved gas tax have driven up fuel costs. But prices soared after a 2015 explosion at an ExxonMobil refinery in Torrance, he said, and they never fully receded.
“They went up $1.50 a gallon after that explosion, but they only went down $1,” he said. “So there is a 50 cent surcharge that the oil companies have been taking advantage of ever since. We want to get to the bottom of this.
California motorists currently pay a state excise tax of 51.1 cents per gallon and a federal excise tax of 18.4 cents per gallon, as well as additional taxes imposed by local governments ranging from 2.25 % to 5.75%, depending on the state. Office of the Legislative Analyst.
A strict regulatory and political environment
Representatives of the various oil companies could not be reached on Friday. But Kevin Slagle, spokesman for the Western States Petroleum Associationwho represents refiners, said California’s high fuel prices are largely the result of the state’s stringent regulatory and policy environment.
“The first $1.27 a gallon California motorists pay is for regulatory programs,” he said. “That’s why California has been on the high end of gasoline prices for years.”
Slagle said California is also a “fuel island.”
“The oil we produce in California is refined in California, but that’s only about 30% of what we need,” he said. “The remaining 70% is imported from Ecuador, the Middle East and other places around the world. The cost of shipping crude oil increases the cost of gasoline.
California could produce more oil in the state, Slagle said, but the state’s political environment has made it nearly impossible to obtain drilling permits.
“There are over 1,000 permits awaiting approval, but Governor Newsom’s administration has essentially imposed a ban by not issuing drilling permits,” he said.
“Charging higher prices”
A report 2019 of the California Energy Commission concluded that the primary cause of the state’s rising prices is “simply the fact that gasoline retail outlets in California charge higher prices than those in other states.”
California motorists paid about $1.5 billion more in gas bills than the rest of the country in 2018, and $11.6 billion more over the past five years, the report said.
Consumer Watchdog President Jamie Court links the hikes to Chevron, Marathon, PBF Energy, Phillips 66 and Valero — refiners he says control 96% of the gasoline made in the state. Court said they have the power to sell gasoline at their branded outlets at 30 to 40 cents per gallon more than the prices they charge small independent retailers.
“California has been an ATM for oil refiners for too long, it’s time to pull back the curtain and find out how much California oil refiners make for every gallon of gasoline they sell and recoup the excess profits “, did he declare.
The recent Russian-Ukrainian conflict has pushed Southern California prices well above $6 a gallon. On Friday, prices at several Shell, Chevron and Mobil stations in Los Angeles County ranged from $6.49 to $7.35 per gallon.
The court said California motorists were paying way too much for gas.
“They’ve been scamming us for too long,” he said. “We even have a name for it – the ‘Golden State Gouge’.”
Jenn Engstrom, director of consumer advocacy group CAL-PIRG, said environmental regulations and taxes accounted for only a small part of higher prices at the pump.
“When there’s so much fluctuation in gasoline prices, it’s important that we have better transparency so we can call oil refineries if they raise prices unnecessarily,” she said.
SB 1322 was introduced on February 18 and will first go to the Senate Energy Committee for a hearing.