(SACRAMENTO, CA) – Assemblymember Marc Levine (D – Marin County) today joined California Attorney General Xavier Becerra announcing a lawsuit by the State of California against two multinational gasoline firms for allegedly manipulating California’s gas prices and costing consumers more at the pump. The lawsuit alleges that Vitol, Inc. (Vitol) and SK Energy Americas, Inc., along with its parent company SK Trading International (SK), took advantage of the market disruption following a February 2015 explosion at a gasoline refinery in Torrance, California to engage in a scheme to drive up gas prices for their own profit. In the complaint, Attorney General Becerra alleges that Vitol and SK violated California’s antitrust laws and engaged in unlawful, unfair, and fraudulent practices that raised the price of gasoline in the state.
According to the Attorney General’s Office, the lawsuit alleges that Vitol and SK engaged in manipulative trades to increase their profits, in violation of the Cartwright Act and California’s Unfair Competition Law. These trades were selectively reported to the Oil Price Information Service, LLC (OPIS) – the most widely used gasoline reporting service in California – in order to drive up the benchmark prices of Regular and Premium gasoline in OPIS’s Spot Market Report. By driving up benchmark prices, the companies were able to sell their own product at a higher price, and inflated costs for consumers.
The complaint also alleges that the two companies tried to hide the nature of their market manipulation scheme by executing and facilitating trades, and attempting to limit or eliminate market risk on their reported trades to OPIS. Vitol and SK also shared the illegally-acquired profits of the scheme amongst themselves. The lawsuit alleges that Vitol and SK’s actions illegally suppressed competition within the gasoline market and forced California consumers to pay more for gasoline.
Becerra’s actions follow a January 2019 request from Assemblymember Levine, Senator Jerry Hill and seventeen other legislators to investigate potential market manipulation of gas prices in California. In the letter to Becerra, Levine noted that in 2017, the Petroleum Market Advisory Committee submitted a report to the California Energy Commission finding that even after accounting for California’s gasoline tax, fuel-blend and greenhouse gas reduction costs, gasoline prices since 2015 have exhibited a continuous and significant unexplained differential, or ‘hidden surcharge’ compared to the rest of the country.
According to researchers at UC Berkeley, from February 2015 to October 2018, this hidden surcharge cost Californians more than $17 billion or about $1700 for a family of four.
High gas prices, Levine feared, were not the result of gas taxes or California’s efforts to reduce greenhouse gas emissions. High gas prices were the result of greed and possible market manipulation by the oil industry.
“Illegal price manipulation is one of many dirty, not so little secrets of the oil industry,” said Assemblymember Marc Levine. “The oil industry’s pattern of profiteering, price gouging consumers and harming our environment has shown big oil’s callous disregard for Californians struggling to get by. According to the lawsuit, high gas prices it turns out are not the result of government taxes or regulations to protect the environment – high gas prices are a result of the oil industry’s greed. I commend Attorney General Becerra for standing up for California consumers and hope the courts will act swiftly to bring the oil industry to justice.”
For more information on Becerra’s lawsuit, visit: www.oag.ca.gov.
A copy of Assemblymember Levine's letter to Attorney General Becerra can be found here: https://a10.asmdc.org/sites/a10.asmdc.org/files/pdf/ag-letter-gas-prices-1-28-19.pdf