Chevron said on Tuesday it reported how much money it made in January from selling gasoline in California, disclosing the data after regulators threatened to fine the company for not following a new law aimed at investigating the cause of the state’s high gas prices.
The law requires oil companies to report their monthly “gross refining margin,” the difference between how much refineries paid for crude oil and how much the company sold it for as gasoline. State lawmakers and regulators believe the data will give them a clearer picture of what has driven sharp increases in California’s gas prices, which are consistently the highest in the nation.
Chevron spokesperson Ross Allen said the company filed a “revised response” late Tuesday afternoon with regulators that included the data required by law. He said the company was never out of compliance with the law, noting they began reporting the data March 2 — the deadline for oil companies to report January pricing data — and supplied the rest of the information after seeking clarification from the California Energy Commission.
“Since the statutory guidance was unclear, rather than speculate and supply inconsistent and potentially inaccurate data, Chevron exercised its statutory right to object and seek clarification in a timely manner,” Allen said.
State law requires much of the data to remain confidential. Representatives with the Energy Commission did not respond late Tuesday afternoon to confirm if Chevron had filed the data.
Gas in California is always more expensive because the state has higher taxes and fees than other states and requires a special blend of fuel that’s better for the environment but more expensive to produce.
Last summer, however, the average price of a gallon of gasoline in California was more than $2.60 higher than the national average, a difference that regulators and state lawmakers said was too large to be explained by taxes and fees.
Gov. Gavin Newsom has accused the state’s big five oil companies of price gouging. He has asked the state Legislature to pass a first-in-the-nation law that would penalize oil companies once their profits surpassed a certain threshold.
The proposal is still pending in the state Legislature. But starting in January, a new law required oil companies to disclose more data about their pricing. That data could serve as the threshold for any new penalties on oil profits in the future.
Of the big five oil companies that provide 97% of the state’s gasoline, four of them met the March 2 deadline for reporting January pricing data: Marathon Petroleum Corporation, PBF Energy Inc., Phillips 66 and Valero Energy Corp., according to the California Energy Commission, which collects the data.
‘Small Fraction’ of Data Submitted
Chevron only submitted a “small fraction of the data required,” according to the commission, and objected to reporting anything else. The California-based company accounts for about 30% of all gasoline sold in the state, giving it the largest share of the market.
In a letter to the Energy Commission dated March 2, Chevron attorney Melissa Sladden asked the commission to delay enforcing the law in favor of a lengthy rule-making process to clarify which data must be reported. Sladden said the data required by the law “paints a false picture of actual refinery profit margins by significantly undercounting refinery costs.”
“Getting this term right is doubly important as it is currently being contemplated by legislators as a measure on which to impose a tax on refiners,” Sladden wrote. “Legislating or regulating based on inaccurate data could result in unintended consequences, such as decreased investment in gasoline production and higher long-term prices at the pump.”
Regulators responded by warning Chevron that the company had until Tuesday to disclose the data or face penalties, which could include fines of up to $2,000 per day.
Allen said Chevron was “disappointed” that their letter to the Energy Commission that objected to disclosing the data was made public. He said the law and the commission’s information request “falls short of the transparency and trust that should inform good policymaking.”
The dispute reflects a larger conflict between the oil industry and Newsom, who is just beginning his second term and is seen as a possible presidential candidate one day. Newsom has pushed aggressive climate policies, including banning drilling new oil wells within homes, schools and community sites.
The oil industry is one of the most powerful lobbying groups in the state, donating lots of money to state lawmakers’ political campaigns. The industry is backing a referendum to overturn the ban on drilling oil wells near sensitive sites. And Newsom’s proposal to penalize oil companies for making too much money has made little progress so far in the state Legislature, with several Democrats voicing concerns about it during a public hearing last month.
State Sen. Ben Allen, a Democrat from Santa Monica who authored the law requiring oil companies to disclose more pricing data, said before the latest Chevron filing that it was “disappointing” the company had not disclosed the data.
“The fact that all of the other industry players were able to do it and they weren’t, I just don’t know what’s going on with them,” he said. “We’re going to hold them accountable.”