On June 25, just one week before many California motorists began paying upwards of $4.30 per gallon for gasoline, the Bahamian-flagged tanker Teesta Spirit left Los Angeles headed for ports on the west coast of Mexico carrying more than 300,000 barrels of gasoline refined in California.
The Teesta Spirit was just one of nine large tankers that left California ports carrying gasoline to places like Mexico and Chile between June 25 and July 23 at a time when oil companies were raising prices by as much as $1 per gallon in some regions.
Altogether, oil companies like Chevron and Phillips 66 shipped about 100 million gallons (42 gallons per barrel) of gasoline out of California during that time span.
The industry explained its huge price increases, levied this time primarily in Southern California, by citing a shortage caused partly by a February explosion that disabled a pollution monitoring unit at Exxon Mobil’s refinery in Torrance. No one explained why it should take more than five months to fix that machinery.
Executives of the industry’s Western States Petroleum Assn. did not respond to repeated telephone attempts to get their explanations for this and for the gasoline exports, which amounted to sending away almost three full days’ statewide supply of gasoline.
As the oil companies were shipping out that fuel, they reaped unprecedented profits reportedly approaching $1.50 for every gallon of gasoline they sold at the higher prices.
Prices, said WSPA President Catherine Reheis-Boyd in a letter responding to a previous column that alleged gasoline price gouging, are a result of supply and demand.
This may be true, but there’s ample evidence the oil firms she represents create some of the shortages they cite as a cause of pricing volatility.
It’s not just the continued exports and any problems at Exxon Mobil in Torrance. They ascribed another price spike earlier this year to shutdowns at refineries in the Martinez/Benicia area northeast of San Francisco. Labor issues, they said, forced those shutdowns. But former employees of one of those plants reported they’ve been kept open during previous, similar labor disputes and could have stayed open this year, too.
Said Reheis-Boyd, “All of the many government investigations…in recent years have concluded that supply and demand are the primary reason (sic) gas prices go up and down.”
Shipping information makes it clear any recent shortage was created at least in part by the companies themselves. Here are some examples: The Atlantic Queen left Long Beach headed for Mexico on June 25 with a capacity of over 398,000 barrels of gas. The Iver Exact, only slightly smaller, left San Francisco Bay heading for Mexico on June 28. The larger Pudu left Long Beach for South and Central America on July 7.
Several other tanker departures from both Northern and Southern California ports were scheduled through the first week of August. How can the industry claim it has short supplies while it’s shipping gas to foreign countries?
Why should California residents suffer the pollution produced by gasoline refineries if the owners of those plants manipulate prices by sending gasoline to foreign users?
Said Jamie Court, president of the Consumer Watchdog advocacy group, “Oil refiners have kept the state running on empty and now they are sending fuel refined in California abroad just as the specter of low inventories drives huge price increases.”
One thing is certain: Because the latest price spikes began just as the new fiscal year started on July 1, the refineries’ record-level profits won’t show up for months in financial reports. To reduce public fury and obfuscate the issue, it’s all but certain the companies, which appear to operate like a cartel as prices at all major brands rise and fall simultaneously, will lower those prices a bit before the third quarter ends Sept. 30.
So far, as Reheis-Boyd notes, the refiners have gotten away with it. They’ve reported record profits for the last two years or so, but even those profits have not been at today’s reported California levels. Besides, profits generated in this state generally are not broken out separately in company reports.
The bottom line is that many California drivers for much of the summer have paid about $1.50 per gallon more than the American average. So far, no government agency shows interest in doing much about it.