CA oil refiners post record profits as Big Oil pumps millions into campaigns and lobbying
As the oil and gas industry pumped nearly $6 million this election season into backing candidates in California legislative races to promote the fossil fuel industry agenda, four of the five big oil refiners in the state posted record profits while Californians are slammed at the pumps with price gouging.
In addition to the millions of dollars that oil and gas corporations have spent to support their candidates in the midterm election, oil drillers are spending $9.2 million to overturn Senate Bill 1137, the bill signed by Governor Gavin Newsom to create 3200-foot health and safety setbacks between oil wells and homes, hospitals, schools, daycare centers, and other facilities.
As if the millions of dollars pumped into campaigns weren’t bad enough, Big Oil and the Western States Petroleum Association spent $4,573,758.08 in lobbying expenses from September 1 to October 31, 2022. That brings the total of oil and gas corporation lobbying expenses to $30,029,637.94 in the 2021-22 Legislative Session to date: cal-access.sos.ca.gov/...
The oil and gas industry, the largest and most powerful corporate lobby in the state, wants to maintain the control of the state’s regulatory apparatus that it has exercised for years while making outrageous profits.
California’s five big oil refiner third quarter profits reports are complete — and a Consumer Watchdog review reveals that four of the five together posted 30% higher profits per gallon from gasoline sold on the West Coast than “anywhere else in the nation or world.”
“Chevron does not report profits per gallon on a quarterly basis but will have to monthly under a new transparency law that kicks in in January,” the group explained in a press statement.
“The four big oil refiners who reported their West Coast profits — Marathon, PBF, Valero and Phillips 66 – together posted an average 73 cents per gallon profit in the 3rd quarter in the West,” according to Consumer Watchdog’s calculation. “California oil refiners have only exceeded the 50 cent per gallon mark three times in the last twenty years. Capping windfall profits at 50 cents, the four refiners would owe Californians a rebate of $1.8 billion for their windfall profits this year.”
“These profit reports show exactly why Californians need a windfall profits cap,” said Consumer Watchdog President Jamie Court. “Oil refiners are taking advantage of Californians by making 30% more profit in the Golden State. The proof of the Golden State Gouge is in the profit reports and it’s time for the legislature to answer Governor Newsom’s call for a price gouging rebate.”
“Marathon Petroleum, the last of the five big California refiners to report quarterly earnings, posted net profits of $4.5 billion, more than six times the profit of $694 million for the same quarter a year ago,” Court revealed.
Marathon made 85 cents per gallon in profits at West Coast pumps in the third quarter, the highest among its three regions. Marathon made $257 million in windfall profits for the quarter.
“That money should go back to drivers in a rebate,” said Consumer Advocate Liza Tucker.
Tucker said SB 1322 (Allen), backed by Consumer Watchdog, will require oil refiners to post their profits per gallon from refining monthly beginning in January.
“This will give California the basis to monitor for price gouging in real-time and, if a price gouging rebate is enacted, to give the excess profits back to drivers. Governor Newsom has called a special legislative session in December to consider a windfall profits cap and price gouging rebate for California consumers,” she explained.
She said oil companies report gross refining margins reflecting the difference between the cost of crude oil bought and the price of petroleum products produced and sold by the refiner. From there, Consumer Watchdog calculates cents per gallon profits by dividing the gross refining margins on a barrel of crude by 42—the number of gallons in a barrel. Marathon operates refineries in California, Washington State and Alaska.
Marathon doubled third-quarter refining margins over the same quarter last year. It reported refining margins of $35.83 for the West Coast, up from $15.56 cents last year, noted Tucker.
For the Gulf Coast, the company reported $27.39, up from $13.03 last quarter. Marathon reported $31.04 for the Mid-Continent region, up from $15.44 for the third quarter last year.
Over time, refineries in California have shut down refineries and started converting others to making renewable diesel and other fuels.
Tucker said Marathon is completing the conversion of its Martinez refinery (now idle) to produce 730 million gallons of renewable fuel per year by the end of 2023. That comes to two million gallons a day.
According to the California Energy Commission, the facility has a refining capacity of 166,000 barrels of crude per day. At 42 gallons in a barrel, that converts to a capacity of nearly 7 million gallons of gasoline a day that could have been produced.
“That will restrict the market and help drive gas prices at the pump up,” said Tucker. “It is the same story with Phillips 66. They are converting their Rodeo refinery to produce 800 million gallons a year of renewable diesel, renewable gasoline, and sustainable jet fuel beginning in 2024.”
With a capacity of 78,400 barrels per day, the refinery could have produced 3.3 million gallons of fuel a day that will be lost to the market, said Tucker.
As the oil companies keep raking in huge windfall profits, fossil fuel companies are spending many millions of dollars on the legislative races in the November election in California.
According to Aaron Cantu of Capital and Main, “Since September, the industry has dropped nearly $6 million on television ads, polling and other services to support candidates through a PAC called Coalition to Restore California’s Middle Class Including Energy Companies Who Produce Gas, Oil, Jobs and Pay Taxes, according to disclosures.” capitalandmain.com/…
One of the most contentious races in the state is in Sacramento between Democratic Senate candidates Angelique Ashby and Dave Jones, who are now in a runoff. Ashby, who pledged not to take oil industry money, has received $1.6 million in oil and gas industry expenditures to date.
As Californians are slammed at the pumps by gas price hikes, the fossil fuel industry continues to post record profits to fight life-saving climate measures while contributing millions of dollars to back its candidates in California legislative races.
At the same time, oil and gas drillers are spending $9.2 million to overturn the new law, Senate Bill 1137, that mandates setbacks of 3200 feet between new and reworked oil wells and homes, schools, child care centers and other facilities.
“Fossil fuel interests have always resisted CA regulations, but their movement to skirt the rules could be hitting an unsavory milestone,” wrote Tomás Morales Rebecchi, Central Coast Organizing Manager for Food & Water Watch, in his commentary in CalMatters: https://calmatters.org/commentary/2022/11/oil-fossil-fuel-california-ballot-measure-regulation/
