California is suing two multinational energy companies for manipulating gasoline markets, contributing to a “mystery surcharge” that the state’s consumers experience at the pump.
Two energy trading companies, Vitol Inc. and SK Energy Americas, engaged in “manipulative trades” to increase their profits, which ultimately drove up gas prices beyond what normal supply and demand would prompt, according to a complaint filed Monday by the California attorney general’s office.
If the companies’ manipulation resulted in just a 1 cent increase in prices at the pump, that would total a $150 million violation of the law measured against the more than 15 billion gallons of gasoline sold in 2015, California Attorney General Xavier Becerra, a Democrat, told reporters Monday.
“We believe the scheme caused more than a 1 cent increase in the price of gasoline, and it went on for more than just one year, so you can see how quickly the amount of the cost of this illegal activity and price gouging caused,” he said. Becerra added that the office will have more specifics about how much it estimates Vitol and SK’s actions cost California consumers closer to the trial.
The lawsuit is the result of an investigation spanning more than a year, which was prompted after Gov. Gavin Newsom, a Democrat, and more than a dozen state lawmakers raised concerns of price gouging.
A May 2019 report from the California Energy Commission found that consumers in the state paid an average of 30 cents more per gallon of gasoline than the rest of the country. For a 15-gallon tank, that would total an extra $4.50, the report said.
“High gas prices, it seems, are not the result of gas taxes or California’s efforts to protect the environment,” said state Assemblyman Marc Levine, one of the lawmakers who requested the attorney general’s investigation.
“High gas prices are a result of the oil industry’s greed,” Levine added. “It is time to hold the oil industry accountable for their years of market manipulation and price gouging of California consumers.”
The attorney general is bringing the lawsuit under the state’s antitrust laws: the Cartwright Act and California’s Unfair Competition Law. The companies took advantage of a 2015 explosion at a refinery in the state, which caused a big hit to the state’s gas supply, to begin manipulating the market in ways that lasted until at least the end of 2016, the complaint alleges.
The complaint also says the companies took steps to hide their actions and “selectively reported” their trades to the Oil Price Information Service, California’s most widely used gasoline reporting service.
Becerra and his team told reporters that Vitol and SK’s actions were likely not the only answer to price gouging in California’s market.
“We don’t think this is the end of our inquiry by a long shot,” said Kathleen Foote, senior assistant attorney general who leads the office’s antitrust section. Foote heads the five-person team who conducted the investigation.
