A new report from Consumer Watchdog confirms what Southland motorists have long suspected — oil refiners are drawing deep profits from gasoline price spikes.
“Refining Profits: How Californians Get Fleeced at the Pump” reviews 10 years of publicly available profit data. First quarter profit reports from the state’s oil refiners show that recent spikes in gas prices resulted in big profits for two of the state’s major oil refiners that specifically report their California refining data.
The price hikes have been attributed largely to in-state refinery problems.
Valero, the state’s fourth-largest refiner, nearly quadrupled its typical quarterly profits in the first quarter of 2015 as gasoline prices began to spike. Over the past five years, the average quarterly California refinery profit for Valero was $25 million. But in the first quarter of this year the company’s profit soared to $82 million, the report said.
Valero’s average quarterly income over the past 10 years was $100 million, but during seven quarters with gasoline price spikes the company made an average profit of $222 million.
Tesoro shut down its Martinez refinery in early February and had to buy gas on the spot market to fulfill contracts, but it still made a first quarter profit of $119 million.
Tesoro’s average quarterly income over the past decade was $142 million. During quarters with price spikes that rose to an average of $231 million.
“California drivers are getting gouged, and California refineries are getting richer every time a refinery goes down and gasoline prices up,” Consumer Watchdog President Jamie Court said. “The proof’s in the oil companies’ own profit reports.”
The report notes that Chevron General Manager Jeff Gustavson admitted why his company’s overall refining profits for the first quarter of 2015 doubled from a year earlier.
“Margins increased earnings by $435 million, driven by unplanned industry downtime and tight product supply on the U.S. West Coast,” he said in a recent conference call with investors.
Court said California refineries are purposely keeping inventories tight so that any disruption will drive prices up. And Southern California gas prices have skyrocketed.