SACRAMENTO, Calif. -- Refiners are under the microscope for possibly triggering gasoline price spikes in California.
The attorney general for California has issued subpoenas to several refiners, including Chevron Corp., ExxonMobil Corp., Phillips 66, Royal Dutch Shell PLC, Tesoro Corp. and Valero Energy Corp., according to The Wall Street Journal. While a spokesperson for Attorney General Kamala Harris declined comment, citing the ongoing investigation, sources told the newspaper that the state is investigating whether the refiners raised retail gasoline prices artificially by withholding supply.
The subpoenas, dating from this past May, ask the refiners to share information about their maintenance, repair and trading activities.
Many of the refiners also declined comment or deferred to industry trade groups for a response. However, a spokesperson for Tesoro, the second-largest refiner in California, cited the factors that go into determining retail gasoline prices. “These include the cost of crude oil, distribution and marketing costs, refining costs and federal and state taxes,” said Destin Singleton. “Market conditions, such as supply and demand, determine the price that consumers pay at the pump.”
According to sources, the attorney general’s investigation is examining shutdowns that afflicted refineries in the state, including a series of fires since 2012 that forced some of the facilities offline. When combined with short-term shutdowns for maintenance, the supply crunch triggered big price jumps at the pump.
While consumer advocacy groups such as Consumer Watchdog have alleged that state refiners may be involved in a conspiracy, the subpoenas do not refer to that charge, according to sources.
The U.S. refiner industry trade group American Fuel and Petrochemical Manufacturers (AFPM) said it was not aware of the investigation, but downplayed its significance.
“California gasoline prices have been investigated repeatedly and never has there been any finding of inappropriate action or price collusion,” president Chet Thompson told the paper. “We are confident that this will be the case again.”
Industry consolidation has left fewer refiners supplying California. Chevron and Tesoro combined have around one-half of the state’s total refining capacity. This has often led critics to accuse them of manipulating prices by limiting supply.
As of July 5, California currently had the highest state gasoline average in the country at $2.91 per gallon, according to GasBuddy. This compared to the national average of $2.26 per gallon.
According to the U.S. Energy Information Administration, a gallon of regular gasoline in California has averaged 64 cents per gallon (CPG) higher than the national retail average in 2016. This compares to an average difference of 25 CPG between 2000 and 2010.
Refiners and industry groups blame the state’s tough gasoline standards, which prevent them from importing relief supply from neighboring states to ease the high prices.
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