Santa Monica, CA November 16, 2012 – In a letter today, Consumer Watchdog called on California State Attorney General Kamala Harris to launch a criminal investigation into the conduct of oil companies in the state based on new information that oil refiners were running refineries and building inventories even when they said that they were performing maintenance.
The full letter follows below.
"It appears that California's oil refineries falsified public information to drive up the price of gasoline, an allegation that, if true, is criminal conduct and reminiscent of the Enron-like manipulation of the California energy market," Consumer Watchdog's president Jamie Court and Energy Project Director Liza Tucker wrote to Attorney General Harris. "This unprecedented information demands a criminal investigation."
Consumer Watchdog reiterated its call for the AG to block the merger of Tesoro and BP, pointing out that if Tesoro takes over BP's refinery in Carson, that will leave two companies—Tesoro and Chevron—controlling 54 percent of California's already overly concentrated gasoline market and exacting a heavy price from consumers.
"Information we learned today only reinforces our call for blocking the merger. McCullough Research reports today that refineries in the state were making gasoline while telling the public that they weren't because of outages or maintenance. McCullough Research analyzed thousands of pages of documents and discovered refineries were operating during supposed outages and maintenance shutdowns.
"McCullough says that in May, when Royal Dutch Shell's Martinez plant was supposedly down for two weeks for maintenance, it was making gasoline at least half the time. State air monitors showed nitrogen oxide emissions associated with making gasoline returned to normal at that location a whole week before the refinery reported coming back on line.
"At Chevron's Richmond refinery, emissions reports suggest that the refinery never shut down, though it reported being down for two weeks in May. Supplies were actually growing in May when consumers here paid at least 50 cents more per gallon than the national average, the group said. October's huge price hike that pushed gasoline up 50 cents a gallon in the space of a week was partly blamed on Chevron's Richmond fire in August. But McCullough says that Chevron's supplies at the time were only growing.
"When the state only has ten to thirteen days of gasoline supply on hand, misinformation about a week's worth of gasoline can cost the consumer $1 per gallon or more at the pump. False information can set the commodities markets on fire. Oil companies know this well and their profits are dependent on misaligned expectation in the commodities market. We urge you take action immediately to prevent California consumers from being gouged by the same type of artificial manipulation of the energy markets that occurred during electricity deregulation."
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