Gas Prices

A consumer advocacy group contends that California refiners are holding down gasoline production to inflate pump prices. (Gene J. Puskar / Associated Press)

Ivan Penn
November 29, 2016

A consumer advocacy group contends that California refiners are holding down gasoline production to inflate prices at the pump.

California gasoline prices remain at least 50 cents a gallon higher than in other areas of the country even though a major Southern California refinery that was mostly shutdown throughout 2015 is back in operation, said Jamie Court, executive director of Santa Monica-based Consumer Watchdog.

Court on Tuesday argued to members of the California Energy Commission’s Petroleum Market Advisory Committee that the difference in the wholesale and retail prices in Los Angeles, for example, were substantially greater than in other big cities such as Chicago and New York.

On Nov. 23, for example, gasoline cost $1.35 a gallon at the wholesale level and averaged $2.75 at retail in Los Angeles, compared with Chicago, where the wholesale price was $1.39 a gallon and retail was $2.25. New York saw $1.41 wholesale and $2.46 retail, Court said.

AAA reported the average price for a gallon of regular gasoline Tuesday was $2.72 in the L.A. area, about 58 cents higher than the national average.

Court said he believes that part of the trouble is that four refiners control 78% of the market. He called for increased disclosure and monitoring of wholesale prices and limits on consolidation in the market to prevent any manipulation of prices.

Severin Borenstein, the committee’s chairman, questioned some of Court’s conclusions, though he agreed that there is a limited number of refiners, which is affecting how the industry operates in the state.

“There’s no question the industry is more consolidated and profiting,” Borenstein said. But he added that he would like to see a longer period of data rather than base conclusions on a limited period.

Ryan Hanretty, executive director of the California Independent Oil Marketers Assn., defended current disclosure requirements as sufficient for protecting the public interest.

“While there are a number of things that go into price, everything is publicly posted,” Hanretty said. “It’s very public for everybody.”

Questions about California gas prices — L.A. area costs in particular — have been the focus of increasing scrutiny following a dramatic price surge in 2015 that resulted from the almost complete shutdown of the Torrance refinery.

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