PBF Energy’s Oil Refining Profits Triple, Soaring to 78 Cents Per Gallon In California

Los Angeles, CA— PBF Energy, California’s third biggest oil refiner, made a whopping $2.26 billion off refining gasoline, tripling its profit in the third quarter after excluding special items, according to a press statement from Consumer Watchdog.

“PBF reported making 78 cents per gallon refining crude oil into gasoline in California in the third quarter– the greatest raw profits anywhere in the nation or world,” said Liza Tucker, Consumer Advocate for Consumer Watchdog. “By contrast, PBF’s profits per gallon were 48 cents on the Gulf Coast, 49 cents per gallon on the East Coast, 55 cents per gallon in the Midwest – an average of 50 cents across the rest of America.”

On its website, PBF Energy (“PBF”) describes itself as is “one of the largest independent petroleum refiners and suppliers of unbranded transportation fuels, heating oil, petrochemical feedstocks, lubricants and other petroleum products in the United States.”

Headquartered in Parsippany, New Jersey, the company’s refineries include facilities in Chalmette, Louisiana; Toledo, Ohio; Port of Paulsboro in Gibbstown, New Jersey; the Delaware City Refinery in Delaware City; the former ExxonMobil refinery in Torrance, California; and the former Shell refinery in Martinez, California, according to Wikipedia.

Tucker said the California margin reflects a windfall profit of $176.4 million for the quarter calculating the windfall profits at every penny made over 50 cents per gallon, a mark hit by refiners in California only three times in the last 20 years before 2022.

“These profits prove the Golden State gouge is real and California needs to enact a price gouging refund law to counter it,” said Jamie Court, president of Consumer Watchdog. “With its windfall profits in this quarter, PBF would owe Californians $441 million for the year if California enacted a windfall profits tax setting the rate at all profits above 50 cents per gallon.”

See the calculation and historic profits chart.

PBF’s Western region profits per gallon that come strictly from its two California refineries in Torrance and Martinez totaled 78 cents per gallon. In the second quarter this year, the company posted per gallon profits of 82 cents and an average 74 cents per gallon in the first quarter, according to Consumer Watchdog.

PBF CEO Tom Nimbley attributed the runaway profits to tight inventories.

“We are trying to get them rebuilt,” he told investors at the third quarter presentation. “A problem is quite clear here…Covid and being ganged up on policy that does not drive you to want to operate the facilities or invest as necessary if you think that there is not a long enough runway on that investment.”

Nimbley said that California “is the same story only a little bit on steroids.” Refinery capacity has tightened with Marathon taking a refinery in Martinez offline to convert to renewable diesel fuel, he said. “So, the market has simply tightened up.”

“For consumers, it’s a sad story,” said  Liza Tucker. “For oil executives with stock holdings it’s a bonanza.” Some executives are cashing out.

Four senior PBF executives sold off more than $9 million worth of stock last spring as PBF’s stock price flew up 145%, according to the Daily Beast.

Governor Newsom has called a special legislative session in December to consider a windfall profits cap and price gouging rebate for California consumers, according to Tucker. Consumer Watchdog estimates that the amount of windfall profits to be returned to consumers by refiners reported so far this year is now over $1 billion. The formula used to calculate windfall profits is every dollar in profit made above 50 cents per gallon.

“A new law, 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,” said Tucker.

Consumer Watchdog calculates cents per gallon in profits by dividing the gross refining margins on a barrel of crude by 42—the number of gallons in a barrel. Gross refining margins reflect the difference between the cost of crude oil bought and the price of petroleum products produced and sold by the refiner.

Oil refiners’ reports to investors only reveal Western regional margins, not California specific profits, which are generally higher, noted Tucker. But both PBF Energy and Valero run West Coast refineries only in California.

“In the third quarter, PBF’s California refineries more than doubled margins per barrel to $33.02 from $8.06 in the same quarter last year. For the nine months, West Coast margins were $27.31 over $6.06 for the nine months the year before. The margins were the highest reported among PBF’s four U.S. regions of operation—West Coast, East Coast, Gulf Coast, and Mid-Continent,” Tucker concluded.

Background: Big Oil Regulatory Capture in “Green” California

Big Oil has been able to get away with what it does in California for decades because of the enormous influence the Western States Petroleum Association, the trade group for the oil industry, and oil and gas companies have exerted over the California Legislature, regulatory agencies and media.

WSPA, the largest and most powerful corporate lobbying group in Sacramento, alone has spent over $17.5 million lobbying the California Legislature and other state officials over the past three years.  With the $3,436,479 WSPA spent between January and June, that would add up to $20.93 million spent by WSPA over the past 3.5 years.

Over the past four years, fossil fuel companies paid almost $77.5 million to lobby lawmakers in Sacramento, reported Josh Slowiczek in Capital and Main on May 14.

“Oil and gas interests spent four times as much as environmental advocacy groups and almost six times as much as clean energy firms on lobbying efforts in California between 2018 and 2021, according to a Capital & Main analysis — reflecting the intensity of the industry’s efforts to influence policy in a state whose leaders have vowed to build an energy future free of fossil fuels,” Slowiczek wrote.

WSPA and Big Oil wield their power in 8 major ways: through (1) lobbying; (2) campaign spending; (3) serving on and putting shills on regulatory panels; (4) creating Astroturf groups; (5) working in collaboration with media; (6) creating alliances with labor unions; (7) contributing to non profit organizations; and (8) sponsoring awards ceremonies, including those for legislators and journalists.

WSPA and Big Oil have for years worked closely with media outlets and more recently have sponsored awards for legislators and journalists.

For example, Catherine Reheis-Boyd, WSPA President and former Chair of the Marine Life Protection Act (MLPA) Initiative Blue Ribbon Task Force to create “marine protected areas” on the South Coast, was on the “short list” of nominees for the LA Times “Inspirational Women Awards” held on October 18, 2022.

Can you guess who was one of the sponsors of the LA Times awards? Yes, you guessed right — WSPA was a sponsor.

According to a tweet from @OfficialWSPA, “Today @latimes acknowledged a woman who is already well known in our industry as a trailblazer and inspiration to tens of thousands of women. Congrats to our fearless leader @WSPAPrez for being recognized as a shortlisted nominee for the Inspirational Women Awards.”

It is also no surprise that five LA Times reporters this year received “environmental reporting” awards from the Sacramento Press Club that were sponsored by WSPA, PR and lobbying firms and others.

In 2015, I wrote this article about how LA Times and the California Resources Corporation teamed up on a propaganda website: https://www.dailykos.com/story/2015/10/30/1442947/-LA-Times-and-Big-Oil-team-up-on-propaganda-website

Fortunately, the LA Times is no longer managing and running that website.