California Seeks Refinery Details in Gasoline Probe -- WSJ
July 01 2016 - 3:03AM
Dow Jones News
By Bradley Olson and Amy Harder
California's attorney general has issued subpoenas to major oil
refiners as part of an investigation into whether the companies
artificially raised retail gasoline prices in the state, according
to people familiar with the matter.
The subpoenas, sent in late May to Tesoro Corp., Chevron Corp.,
Exxon Mobil Corp. and others, seeks information about trading,
maintenance and repair activities at the companies since 2014.
The document requests from Attorney General Kamala Harris, a
Democrat who is running for a U.S. Senate seat in November, focus
on whether the companies withheld supply in a way that lifted
prices, the people said.
A spokeswoman for Ms. Harris said she couldn't comment on an
ongoing investigation.
Officials at the companies that received subpoenas, which also
included Royal Dutch Shell PLC and Phillips 66, either declined to
comment or referred questions to industry trade groups.
A Valero Energy Corp. spokeswoman said the company would
"respond accordingly."
"It is important to note that there are many factors that
determine the price of gasoline," said Destin Singleton, a
spokeswoman for Tesoro, the state's second-largest refiner. "These
include the cost of crude oil, distribution and marketing costs,
refining costs and federal and state taxes. Market conditions, such
as supply and demand, determine the price that consumers pay at the
pump."
The scope of the investigation centers on refinery shutdowns
according to people familiar with the matter. Since 2012, several
fires have knocked big plants offline. Coupled with temporary
closures for maintenance activities, the lack of supply led to
several pronounced price spikes.
While some industry critics such as Consumer Watchdog have
suggested that the shutdowns have the appearance of a conspiracy,
and have made calls for greater industry transparency, the
subpoenas don't articulate that rationale, the people said.
The American Fuel and Petrochemical Manufacturers, which
represents U.S. refiners, said it wasn't aware of the subpoenas but
downplayed the significance of an investigation, noting it wasn't
the first of its kind.
"California gasoline prices have been investigated repeatedly
and never has there been any finding of inappropriate action or
price collusion," said Chet Thompson, president of the
organization. "We are confident that this will be the case
again."
California, drivers generally face some of the highest gasoline
prices in the U.S. Drivers in the state current pay $2.98 per
gallon on average, compared with the national average of $2.33,
according to U.S. Energy Information Administration data.
Pump prices in the state haven't fallen as much as elsewhere in
the country in the wake of the worst oil crash in decades. So far
this year, a gallon of regular gasoline has cost an average of 64
cents higher in the state than the U.S. average. The average
difference between 2000 and 2010 was about 25 cents, according to
the U.S. Energy Information Administration.
The state's high prices have long been a politically charged
topic. Industry officials have asserted that their hands are tied
due to the requirements for low-pollution gasoline, saying they
make it impossible to pipe in refined products from nearby states
that would reduce prices.
Critics have alleged that refiners are colluding to limit supply
and manipulate prices, noting that consolidation in the industry
has left the market in the hands of a few companies. Chevron and
Tesoro control about half of California's refining capacity.
The gas-price problem grew more pitched last year after a
February 2015 explosion at an Exxon plant. Most of the production
at the Los Angeles-area refinery has been offline since.
Write to Bradley Olson at Bradley.Olson@wsj.com and Amy Harder
at amy.harder@wsj.com
(END) Dow Jones Newswires
July 01, 2016 02:48 ET (06:48 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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