California Consumer Advocates Complain About Record Oil Industry Profits

Consumer advocates said oil refineries are logging record profits as the state's drivers pay gas prices well above $4 a gallon.

Consumer Watchdog looked at refinery margins, which is the cost and profit calculated for every gallon of gas that's refined. The historical margin averages about 46 cents a gallon. The current margin is $1.17.

Oil industry officials said that number is misleading because it includes both cost and profit. They blame recent prices on refinery outages.

The issue is getting attention because California's average price is about $1.10 above the national average price. The difference is even sharper in Southern California where prices are nearly $1.40 higher.

Consumer Watchdog's Jamie Court said the state needs to step in to regulate prices.

"What's really outrageous is we're over $4 a gallon and the price of crude is more than half of what it was the last time we were over $4 a gallon. It's between $50 and $60 a barrel," Court said.

Current gas prices are uncomfortable for all California drivers, according to Tupper Hull of theWestern State's Petroleum Association. He said the soaring prices are linked to a series of refinery outages that create gas shortages.

"The market can react with a lot of volatility and you will see big swings in prices," Hull said. "Right now we're seeing truly one of the largest differentials between the national average and California prices than we've seen in a very long time."

San Diego's average price for a gallon of regular is a $1.44 above the national average.

Consumer Watchdog is asking the governor and state lawmakers to intervene with a windfall profit tax. They also hope the refining industry shares more information about their business.

Via: KPBS

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CA Policies to Blame for High Gas Prices, Not Oil Companies

Am I the only one that finds billionaire/environmentalist Tom Steyer siding with Consumer Watchdog’s attack on the oil companies counter intuitive?

Consumer Watchdog and Steyer say the oil companies are manipulating production so Californians have to pay more for gasoline. They say it adds to the cost of gasoline for the consumer.

Steyer’s goal is to get people to reduce or perhaps stop entirely the use of fossil fuels. He’s a renewable energy advocate.  Shouldn’t he be thrilled that people must pay more for gasoline encouraging them to use less? Wouldn’t the laws of economics help his crusade to reduce fossil fuels and increase the use of renewable energy if people had to pay not the $3.44 per gallon average in California today but say, $15.44 a gallon; or $50.44 per gallon, for that matter?

Or is there another agenda here?

If the idea is to paint the oil companies as bad guys, gouging the public, that might come in handy if Steyer runs the campaign he has discussed to levy a tax on oil as it is removed from the ground. Then again such a tax would also raise the cost of gasoline at the pump for the average Californian.

California’s tax and regulation requirements for gasoline and reduced number of refineries are the chief reasons Californians pay so much more for gasoline than other parts of the country.

Yet, Steyer says cost is a concern for him. He told the L.A. Times that even the current cost of gasoline is a burden on working people commuting to work.

Well, I’m not a billionaire so maybe Mr. Steyer understands something about finances that escapes me — but in my two plus two world the economics of this situation do not add up.

Via: California Political Review

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