It’s high time to do something about the gas fires – The Ukiah Daily Journal

The gasoline price gouging that has plagued California for decades no longer seems to be a sporadic occurrence. It is now a permanent phenomenon.

Shock and outrage ensued about 18 months ago when California’s five major gasoline refineries raised their prices by more than $2 per gallon in just two days in February 2023, keeping them at around $7 for weeks before finally letting them slide to over $5, where they mostly remain today.

That led to unexpected gains for those companies: Chevron, Marathon, PBF, Phillips 66 and Valero all posted record profits in the next two quarters. It also led to a special session of the legislature that created a new division of the state Energy Commission to impose fines when companies are caught exploiting their millions of customers.

The new Division of Petroleum Market Oversight has not yet penalized anyone, even though refinery prices and profit margins remain near the record levels reached during and shortly after the big price run-up early last year.

Enter Consumer Watchdog, an advocacy group that has saved California drivers more than $13 billion in auto insurance premiums over the past 35 years by using rules set out in 1988’s Proposition 103, largely written by the organization’s founder, attorney Harvey Rosenfield.

The industry, Governor Gavin Newsom and the state’s current insurance commissioner, Ricardo Lara, are currently feverishly trying to kill Proposition 103, and the consumer protection group Consumer Watchdog is opposing the attempt.

But the group is also demanding action from the new Division of Oil Oversight. In a recent comment, Consumer Watchdog used government data showing that refinery profits reached record levels in both 2022 and 2023. During those years, major oil companies claimed that refinery maintenance and accidents caused bottlenecks that led to price increases.

Price increases were clearly the reason for these record profits. According to Consumer Watchdog, gasoline refiners’ profits averaged 64 cents per gallon over the past decade. But in 2023, the average annual margin was $1.01, a 57 percent increase in profits. In other words, for Californians already struggling with higher food and utility prices, that was a highly inflationary additional cost of 37 cents per gallon.

Jamie Court, chairman of the consumer protection organisation Consumer Watchdog, said: “Every price increase over the last decade has been accompanied by a corresponding increase in margins or profits.” In short, the higher petrol prices rise, the more profits the oil companies that own the major refineries make.

This must end if the inflation that plagues everyone in this country – except the richest – is ever to be contained.

Surprisingly, the peak prices and the current prices at all major refineries are almost identical. This obviously indicates illegal collusion.

Court told the Energy Commission: “Companies often defend allegations of illegal parallel action on the basis of business reasons. Maintaining higher prices and profits year-round (without) such reasons (such as claims of supply disruptions) would put companies at great legal risk.” He added that not capping profits on refiners “would be tantamount to giving in to terrorists, which the Commission now has the power to do because we have laws criminalising terrorism.”

And yet the Energy Commission has not put a stop to prices, which are now nearly $2 per gallon higher than the $3.76 recently prevailing in the rest of the continental United States.

Republican politicians often claim that this price difference is due to California’s gasoline taxes. However, nearly a third of the difference is due to gasoline price gouging revealed in the industry’s monthly reports to the Energy Commission. This new requirement of the same law that gives the oil regulator the power to cap profits has been repealed.

So it’s high time to enact this now year-old law and cap refiners’ profits at a reasonable level. The consumer protection group proposes a cap of 70 cents per gallon, more than the industry average over the eight years before the 2023 increase.

This measure alone could reduce the price difference between California and other states by about a third. That would be a huge benefit for millions of Californian drivers.

E-mail Thomas Elias at [email protected]. His book, “The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It,” is now available in its fourth paperback edition. For more of Elias’ columns, visit www.californiafocus.net