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Santa Monica Consumer Group Presses for Explanations for Gas Price Spikes

Santa Monica Real Estate Company, Roque and Mark

Pacific Park, Santa Monica Pier

Harding Larmore Kutcher & Kozal, LLP  law firm
Harding, Larmore
Kutcher & Kozal, LLP

By Hector Gonzalez
Staff Writer

April 2, 2015 -- A billionaire environmentalist and the president of a Santa Monica-based consumer advocacy group are calling on state lawmakers to press oil industry officials harder for answers about why Californians continue to pay more at the pump than their fellow Americans.

Jamie Court, president of Consumer Watchdog, a non-profit education and advocacy group based in Santa Monica, and philanthropist Tom Steyer, president of NextGen Climate, a nonprofit  pro-environment political action committee, sent a letter Monday to three California senators who held a hearing last month into why gasoline prices spiked by $1 in February while the price of crude remained low.

While the March 24 hearing was “vital to giving consumers a fair shake at the pump,” it raised more questions than it answered, Court and Steyer said.

The hearing “provided some tantalizing insights into the opaque workings of the gasoline market” and confirmed that the market “is rigged to the benefit of an oligopoly and the rules need to be changed to benefit consumers rather than the oil industry,” Court and Steyer said in the letter.

The letter was sent Monday to state Sen. Ben Hueso, D-San Diego, chairman of the Senate Energy, Utility and Communications Committee, and Sen. Jim Beall, D-San Jose, who heads the Transportation and Housing Committee. The three chaired last month’s hearing, “Up Like a Rocket Down Like a Feather: The State of California’s Gasoline Market.”

Court and Steyer noted that although the lawmakers invited oil company executives to testify at the hearing, Western States Petroleum Association instead paid economist Phil Verleger to speak on their behalf.

According to Court and Steyer, Verleger dodged direct questions about refinery shutdowns and gas price hikes and offered a vague response when Hueso asked whether refineries should have to publicly justify their prices hikes as is done with auto and home insurance, the letter said.

“It’s outrageous that the oil industry would refuse to answer for the $550 million extra California consumers were forced to pay in February for their gasoline above the U.S. average, particularly as the hearing proved the oil companies were the ones profiting from California’s price spike,” said the letter.

Court and Steyer called on the lawmakers to demand answers from oil executives about why refineries didn’t increase supplies in February “when it became clear that prices were going to spike” and why California refineries consistently keep one week less of gasoline inventory than the rest of the country.

They also want lawmakers to find out why refineries don’t disclose “real-time information about their operations and outages.”

“If oil company executives refuse an invitation to answer these and other questions, we urge you to use your subpoena power to compel them to testify,” wrote Court and Steyer.

“In addition, others with knowledge about refinery operations should be brought forth  under oath to answer these outstanding questions.”

Refineries going off line -- like two that shut down in February, including Exxon’s refinery in Torrance following an explosion -- provide ready excuses for companies to raise prices at the pump, with little or no government oversight or review, said a Consumer Watchdog report, “Price Spiked: How Oil Refiners Gouge California and What It Costs,” released last month. (Santa Monica Consumer Group Blames Refineries for Pump Price Spikes,” April 1, 2014)

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