Consumer group alleges gas price manipulation by California refiners

Major oil refiners are artificially hiking gasoline prices throughout California by charging branded gas stations an average of 30 cents a gallon more than what independent stations pay -- the biggest price gap in years, according to a consumer advocacy group.

Santa Monica-based Consumer Watchdog plans to present its report Tuesday afternoon at a meeting held by the Petroleum Market Advisory Committee, a group created by the California Energy Commission to look into market data and gas price manipulation.

A gallon of regular gasoline currently costs an average of $3.44 statewide -- down 69 cents from last year’s average, and nearly 30 cents from last month’s average, according to fuel price tracker GasBuddy.

But Consumer Watchdog said that oil refiners have wielded their leverage over branded gas stations -- which are contractually obligated to buy gasoline at whatever prices refiners set -- to inflate prices this month.  Independent stations, which tend to be smaller and in locations that are less convenient to travelers, purchase gasoline from the wholesale market instead of directly from refiners.

In the last two weeks, refiners in Los Angeles charged branded stations an average of 30 cents more per gallon than they did unbranded stations, according to Consumer Watchdog. The average premium over the last 16 years was three cents.

Until this month, the 30-cent gap has only occurred three times since 1999 and never for more than one week, according to the group.

“It’s basically like a grocer putting his hand on the scale because he owns it to drive up price,” said Consumer Watchdog President Jamie Court.

The price disparity could violate the federal Robinson-Patman anti-price-discrimination law as well as a 2013 agreement thata refining and marketing company Tesoro Corp. struck with California Atty. Gen. Kamala Harris before purchasing all of Arco’s Southern California stations from BP, according to Consumer Watchdog.

The group called for Harris to appoint an independent prosecutor to investigate the allegations.

Tesoro did not immediately respond to requests for comment.

Tupper Hull, spokesman for the Western States Petroleum Assn. trade group, said that Consumer Watchdog has made “numerous inflammatory and demonstrably inaccurate allegations this year” about fuel markets.

“The petroleum industry on the West Coast has been the subject of dozens of investigations over the past few decades by organizations and individuals with far more knowledge and understanding of fuel markets than Consumer Watchdog, and none of those investigations have ever found evidence of anti-competitive conduct,” Hull said.  

Earlier this year, after Tesoro temporarily idled its Martinez, Calif., plant amid a nationwide walkout by union members and an explosion at Exxon Mobil Corp.’s Torrance facility left the refinery operating only partially, California pump prices surged up by $1 a gallon.

In March, several state senators met in Sacramento to discuss the uptick, which made the fuel more expensive than anywhere else in the country.

Consumer Watchdog said then that refineries were colluding to limit refining capacity and manipulate the market -- a tactic made possible by intense consolidation in the industry.

On Tuesday, Court also criticized the state energy commission for holding Tuesday’s meeting at the Haas School of Business at UC Berkeley, saying the venue receives donations from major oil companies and their foundations.

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