After California accuses oil industry of price gouging company hits back

by Sara Floyd Hello

Despite declining crude oil prices, gas prices have spiked, last week after the agency demanded oil refinery executives explain why Valero hit back at California’s Energy Commission (CEC).

In a Sept. 30 letter to executives CEC Chair David Hochschild wrote “Gas prices have increased by a record $0.84 per gallon in 10 days in California, a $2.50 difference compared to U.S. prices, yet Crude oil prices are down and industry profits are up”.

“This degree of divergence hasn’t happened before from national prices, and no explanation has been provided regardless of planned or unplanned refinery maintenance. The oil industry owes Californians answers.”

For the price spike Hochschild accused the executives of not providing an “adequate and transparent” explanation. To a tightening gasoline market that has increased gasoline prices over the prior week he noted that the industry’s “lower-than-normal” stockpiles of gasoline appear to be a contributing factor.

Hochschild demanded that the industry leaders explain why gasoline prices have risen “Despite a sharp downturn in global crude prices, no significant unplanned refinery outages in the state, and no increases in state taxes or fees”.

Hochschild asked that to the price increases to address logistics or other obstacles that the State of California could do that have contributed. Despite “for months, or in some cases years” that planned maintenance would occur he also demanded that refiners explain why they supposedly allowed inventory levels to drop.

Among oil refineries, pointing to a federal judge having thrown out another case finding no basis for them In response, Valero’s Vice President State Government Affairs, Scott N. Folwarkow, denied any allegations of “price conspiracies”.

Instead, with “government-imposed costs and specifications” Folwarkow said market price was driven by supply and demand, coupled.

The company has planned accordingly to meet its contractual obligations to its customers but said that he noted that Valero has planned maintenance activity.

In the country and (being) a very hostile regulatory environment for refining with the state being the “most expensive operative environment”, on post-COVID’s growing demand and limited supply Folwarkow blamed low inventories. He said the higher prices in California than in the rest of the U.S. had to do.

He said “With the expressed intent of eliminating the refinery sector California policy makers have knowingly adopted policies”. “California requires refiners and burdens gasoline with the cost of the law’s carbon fuel standards to pay very high carbon cap and trade fees”.

To increase refining capacity and have prevented supply projects to lower operating costs of refineries he argued that the state’s policies have made it difficult. For additional comment the Company has reached out to Valero and the CEC.

“Adding further costs, will only further strain the fuel market and adversely impact refiners and ultimately those costs will pass to California consumers in the form of new taxes or regulatory constraints,”, he said.

Russia’s invasion of Ukraine and ongoing disruptions in the global supply chain, gas prices soared across the nation this summer because of high inflation.

They have continued to spike in California, hitting an average of $6.39 per gallon on Friday — $2.58 higher than the national average, while gas prices have recovered somewhat nationwide, according to AAA.

In the nation’s most populous state California has the second-highest gas tax in the country and other environmental rules that increase the cost of fuel. Still, Newsom said there is “nothing to justify” a price difference of more than $2.50 per gallon between California’s gas and prices in other states.

In December he will call a special session of the state Legislature to pass a new tax on oil company profits to punish them for what he called “rank price gouging, as Valero’s letter was made public Friday”, California Gov. Gavin Newsom said.

It’s unclear how the tax Newsom is proposing would work with legislative leaders. Newsom said he is still working out the details, but on Friday said he wants the money to be “returned to taxpayers,” possibly by using money from the tax to pay for more rebates.

Source:- https://coinworldlive.com/after-california-accuses-oil-industry-of-price-gouging-company-hits-back/