As Refinery Profits in California Soar and Gas Prices Rise, Will Someone Do Something About it in Sacramento?

The Chronicle article starts:

Profit margins at California's gasoline refineries are soaring. And they're taking pump prices along for the ride.

Refinery profit margins have more than doubled since last fall, according to one rough measurement, and now stand at $39 per barrel on the West Coast. That's more than double their average of $17 for the last five years.

Bulging refinery margins are one of the reasons Californians now pay $2.96 for a gallon of regular, up 44 cents since the start of February. And they play a part in record multibillion-dollar profits of major oil companies.

Californians also pay far more than drivers in other states do. The state's average now is 45 cents higher than the national average. Usually, the difference is more like 25 cents.

Read the rest of the article and you'll learn that:

• The state has no real effective tools to deal with market manipulation. The California Energy Commission "keeps tabs," but has no regulatory power.

• The investigation opened last year by then Attorney General Lockyer into this is still open.

• Although critics of the state getting involved point out that prior investigations have failed to uncover a smoking gun, it is practically impossible to find out whether there is a real scarcity of refined gasoline in California, according to UC expert Severin Borenstein.

• Profits from refineries is one of the reasons oil companies, including Chevron, have posted record profits in recent years.

• There are a limited number of refineries in the state and Chevron itself controls about 25% of the oil refined in California.

Last month, the Foundation for Taxpayer and Consumer Rights (FTCR) warned that:

A sharply widening gap between gasoline and crude oil prices, year over year, is setting up California motorists for another spring and summer of intolerably high gasoline prices.

"The oil companies' chief line of argument on gasoline prices is that they are tightly linked to crude oil prices," said Judy Dugan, research director of FTCR. "In California, they are obviously being decoupled for another season of blatant price gouging."

California gasoline topped out last May at $3.38 for a gallon of regular, and the price stayed above $3 all summer, dipping mysteriously until after the November election which had Proposition 87, the alternative energy measure, on the ballot. This led to an article: "Rebound in gas prices raises suspicion of politics: AAA mystified by post-election boost; Prop. 87 may have kept price down" in the Santa Rosa Press Democrat.

Data compiled by independent oil analyst Tim Hamilton from weekly federal Energy Information Administration reports show that the price decoupling is a trend that has developed since the beginning of the year. His chart shows last year's oil and gasoline prices compared to this year's.

Said Dugan then:

"These figures show that gasoline prices are not about the price of oil but about maximizing the already obscene profits of oil companies and their refiners. At the rate gasoline prices are rising in California, $3.00 for regular is just around the corner-unless lawmakers step up and demand change."

Unfortunately, she has been proven right.

FTCR has urged Congress and state government to update price-gouging laws to account for such excess profit taking at the refinery level, rather than just at the retail level.

This is exactly why the California Constitution provides for a state Public Utilities Commission. Our Constitution authorizes the legislature to add additional classes of private corporations that are public utilities. We should act.