SACRAMENTO, Calif., May 29, 2025 /PRNewswire/ — At a California Assembly oversight hearing, state regulators revealed new data showing that oil refiners feeding branded stations have made a killing from California consumers and that refiner-reported data about operating costs were overblown.
The data provided by the California Energy Commission (CEC) and Division of Petroleum Market Oversight (DPMO) showed the excessive refiner profits during 2022 and 2023 moderated during 2024, after state reforms enacted in legislative special sessions were implemented.
“The new data shows that the mystery gasoline surcharge is being driven by branded refiners that are taking excessive profits from their integrated networks because they have the market power to demand those higher prices from station owners,” said Jamie Court, president of Consumer Watchdog. “The reason Californians pay the highest price in the nation at the pump is this mafia-style shakedown scheme driven by branded refiners and the vig is 70 cents extra per gallon.”
Among the key findings revealed:
California have faced elevated prices: Retail gasoline prices in California averaged $0.41 per gallon higher than prices in other states after accounting for taxes, fees, and environmental program costs since 2015.
California refiners saw elevated refining margins: Gross gasoline industry margins in California increased by $0.36 per gallon relative to the rest of the U.S. since 2015; margins peaked at $2.36 during the fall 2022 price spike.
Market power plays a big role: About 90% of in-state refining capacity is controlled by four companies, and about 50% of refiner sales are through vertically integrated sales channels. The control of the top four will increase to 98% after refineries slated to close do so.
Price spikes in the spot market and increasing branded markups are driving higher prices: In addition to spot market price spikes, branded prices are increasing. Retail gasoline sold at major brands has the highest mystery gasoline surcharge of $0.72 per gallon since 2015.
There are “haves” and “have nots” in the refining sector: Outside of price spikes, large integrated refiners benefit from marketing/retail networks, while smaller non-integrated refiners are marginal. Refiners with branded networks made excessive profits and those without the networks are more prone to closure. “Unbranded focused” refiners had lower gross refining margins than “branded focused” refiners, according to a new analysis by refiner type.
Refiners inflated their “operating costs” in state reporting to manipulate “net margins” data. While the average operational costs of running a refinery reported to investors was about 20 cents per gallon, refiners reported inflated operating expenses of 60 to 80 cents per gallon to the state. These inflated numbers likely including all costs of running a refinery for jet fuel and diesel production, not just those attributable to making gasoline.
The CEC raised concerns about stabilizing existing refiners, particularly the “unbranded focused” refiners, following two refinery closures. It also noted that refineries are closing in other states due to the growth of super-refineries with high capacity in Mexico, Kuwait, Nigeria and Oman.
Vice Chairman Siva Gunda also claimed that a crude oil pipeline that fed Northern California refiners was in danger of shutting down and that could complicate the woes in the refining market. Gunda expressed support for increasing crude extraction out of Kern County. He said that a state analysis found that could be done without impacting an existing law creating a setback of a half mile between oil wells and communities.
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SOURCE Consumer Watchdog
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