October 5, 2022
Sacramento — California Energy Commission Chair David Hochschild released the following statement after sending a letter to oil executives last Friday asking for answers on the sudden, unprecedented spike in gas prices over the past month. This price spike is occurring despite decreasing crude oil prices, minimal unplanned outages for maintenance and no new state taxes or fees on gas at the pump.
“As I expressed in my letter to the oil industry last week, the recent sudden increases in prices at the pump are unacceptable and place an undue high burden on California families and businesses. Over the course of 10 days, oil companies increased gas prices by a record 86 cents per gallon. At the end of August, crude oil prices were roughly $100 per barrel, and the average gas price in California was $5.06. Now, even though the price of oil has decreased to $90 per barrel, today the average gas price at the pump has surged to $6.43.
“The oil industry’s lobbying group argued that gas prices increased because of drilling permitting issues, which is misleading. The reality is 40 percent of the oil industry’s approved permits in California are still valid but have not yet been used, and the price increase is occurring at the refining stage of gas production, not the oil extraction stage. And it does not explain the sudden gap between national and California prices.
“Even more alarming, and in need of explanation, is the amount of refinery costs and profits that people pay for every gallon of gas — ballooning by $1.54 for every gallon of gas over the past month.
“Data show even as crude oil prices decreased and state fees and taxes remained unchanged, the price at the pump still went up because refinery costs and profits more than tripled, now accounting for $2.18 for every gallon of gas that Californians buy. What explains a one-month jump in refinery costs and profits, from $0.64 to $2.18.
“In September 2019, five refineries experienced unplanned maintenance issues, and California was faced with several refinery outages. The price spike was a mere 34 cents — a fraction of what Californians have been paying over the past week. Even the 2015 explosion at the ExxonMobil refinery in Torrance caused a price increase of only 46 cents per gallon, and the California Department of Justice deemed this price shock to be exacerbated by illegal price-fixing. So, refinery maintenance alone — especially prescheduled maintenance — cannot explain a sudden $1.54 increase in what refineries charge for every gallon of gas Californians buy.
“All options are on the table to ensure Californians aren’t paying higher gas costs at the whims of the oil industry. Additionally, the CEC will use every tool at its disposal to get answers, and refusal to respond will factor into any fixes necessary.”