Los Angeles, CA— As Californians paid record high prices at the gas pumps, oil companies and their refinery operations reaped record profits in only three months from July to September 2022.
In their latest report on oil company profiteering, Consumer Watchdog revealed that oil refiner Phillips 66 posted third quarter refining profits of $2.8 billion, accounting for more than half of its total quarterly profits of $5.3 billion.
“Its total corporate profits rose seven times over those generated in the third quarter last year,” said Liza Tucker, consumer advocate. “It made 68 cents per gallon in profits at the pump in the third quarter, well past the 50-cent per gallon windfall profit mark that California refiners have only crossed three times in twenty years before 2022.”
Phillips made a windfall profit of $94.5 million for the third quarter when calculating the windfall at every penny made over 50 cents per gallon, according to Consumer Watchdog. Phillips' 2022 windfall profits in California now pushes the rebates owed to consumers by three of the five big California refiners to more than $1.5 billion for 2022, Consumer Watchdog calculates.
“Phillips’ West Coast profits confirm the pattern of big refiners making major windfall profits off of consumers living in California and the need for the legislature to pass Governor Newsom's proposal to rebate the excess profits to consumers,” said Tucker.
“Phillips’ West Coast profits per gallon were the highest reported across its regions except for the Mid-Continent,” she emphasized. “There, Phillips reported big profits largely due to cheap Canadian crude oil. Gulf Coast profits per gallon were 50 cents, while the company reported 45 cents per gallon for the Atlantic Basin/Europe and 63 cents per gallon worldwide. “
She noted that Governor Newsom has called a special legislative session in December to consider a windfall profits cap and price gouging rebate for California consumers. A new law, SB 1322 (Allen), backed by Consumer Watchdog, will require oil refiners to post their profits per gallon from refining monthly beginning in January. This will give California the basis to monitor for price gouging in real time and, if a price gouging rebate is enacted, to give the excess profits back to drivers.
“Oil companies provide to investors gross refining margins that reflect the difference between the cost of crude oil bought and the price of petroleum products produced and sold by the refiner,” Tucker explained. “From there, Consumer Watchdog calculates cents per gallon profits by dividing the gross refining margins on a barrel of crude by 42—the number of gallons in a barrel.”
Oil refiners' reports to investors only reveal Western regional margins, not California specific profits, which are generally higher, according to Tucker. While both PBF Energy and Valero run West Coast refineries only in California, thus their reported margins are only for California. Phillips 66 operates refineries in California as well as in Washington state.
Phillips reported realized refining margins of $28.64 for the West Coast, down from $33.13 in the second quarter. For the Mid-Continent, the company reported $38.76, up from $26.72 last quarter. Phillips reported $21.29 for the Gulf Coast, down from $24.80 in the last quarter. Worldwide the company reported $26.58, down from $28.31 last quarter. For the Atlantic Basin/Europe, the refiner reported $19.22, down from $30.39 last quarter.
Governor: ‘Big Oil is making record profits by ripping off Californians’
A press statement from the Governor’s Office also reported that BBP posted $8.2 billion in profits, its second-highest on record, with $2.5 billion going towards share buybacks that benefit Wall Street investors, while Marathon Petroleum profits rose to $4.48 billion, a 545% increase over last year’s $694 million.
Phillips 66 and Marathon operate refineries in the state that have raised costs on Californians despite the cost of crude declining, blaming such increases on refinery maintenance and other issues, the Governor’s Office explained.
”This follows Valero’s $2.82 billion in profits that were 500% higher than the year before, PBF Energy’s $1.06 billion that was 1700% higher than the year before, Shell’s $9.45 billion haul that sent $4 billion to shareholders for stock buybacks, Exxon’s highest-ever $19.7 billion in profits, and Chevron’s $11.2 billion in profits,” the statement continued.
“Big oil is making record profits by ripping off Californians. They said high prices were because of war, state taxes and maintenance, but now we know that was all a facade – these high prices went straight to their bottom line,” said Governor Newsom. “A price gouging penalty will put these windfall profits back in the pockets of Californians.”
“Following these record-breaking Q3 profits, big oil executives seem to be acknowledging the need to put money into the pockets of consumers. While Shell directly acknowledged it, Exxon did so in their own special, out-of-touch way,” Newsom explained:
- Shell CEO: “I think we should be prepared and accept that our industry will be looked at for raising taxes in order to fund the transfers to those who need it most.”
- Exxon CEO: “There has been discussion in the US about our industry returning some of our profits directly to the American people. That’s exactly what we’re doing in the form of our quarterly dividend.”
The Governor’s Office said this comes on the heels of a report showing that refiners like PBF Energy are making more profits off of Californians than in any other state – $0.78 per gallon compared to the national average of $0.50, a 56% differential.
According to Consumer Watchdog, “PBF reported making 78 cents per gallon refining crude oil into gasoline in California in the third quarter – the greatest raw profits anywhere in the nation or world. By contrast, PBF’s profits per gallon were 48 cents on the Gulf Coast, 49 cents per gallon on the East Coast, 55 cents per gallon in the Midwest – an average of 50 cents across the rest of America.”
Big Oil was making these record profits at a time when Californians were seeing gas price hikes at the pump, despite the fact that the cost of crude oil was down, the group noted.
On October 25, Catherine Reheis-Boyd, the President and CEO of the Western States Petroleum Association and former Chair of the Marine Life Protection Act (MLPA) Initiative Blue Ribbon Task Force to create “marine protected areas” in Southern California, responded to Governor Newsom’s statement on oil industry profits
“No one wants high energy costs, or the global market we have now that creates them. But, demonizing the oil industry must stop,” Reheis-Boyd said.
“What the Governor should do is promote an all of the above energy strategy and end his own policies that reduce oil supply and discourage investment in refining capacity and infrastructure. These are the actions that create market uncertainties and higher costs to consumers,” Reheis-Boyd claimed.
Background: Big Oil Regulatory Capture in ‘Green’ California
Big Oil has been able to get away with what it does in California for decades because of the enormous influence the Western States Petroleum Association, the trade group for the oil industry, and oil and gas companies have exerted over the California Legislature, regulatory agencies and media.
WSPA, the largest and most powerful corporate lobbying group in Sacramento, alone has spent over $17.5 million lobbying the California Legislature and other state officials over the past three years. With the $3,436,479 WSPA spent between January and June, that would add up to $20.93 million spent by WSPA over the past 3.5 years.
Over the past four years, fossil fuel companies paid almost $77.5 million to lobby lawmakers in Sacramento, reported Josh Slowiczek in Capital and Main on May 14.
“Oil and gas interests spent four times as much as environmental advocacy groups and almost six times as much as clean energy firms on lobbying efforts in California between 2018 and 2021, according to a Capital & Main analysis — reflecting the intensity of the industry’s efforts to influence policy in a state whose leaders have vowed to build an energy future free of fossil fuels,” Slowiczek wrote.
WSPA and Big Oil wield their power in 8 major ways: through (1) lobbying; (2) campaign spending; (3) serving on and putting shills on regulatory panels; (4) creating Astroturf groups; (5) working in collaboration with media; (6) creating alliances with labor unions; (7) contributing to non profit organizations; and (8) sponsoring awards ceremonies, including those for legislators and journalists.
WSPA and Big Oil have for years worked closely with media outlets and more recently have sponsored awards for legislators and journalists.
For example, Catherine Reheis-Boyd, WSPA President and CEO, was on the "short list" of nominees for the LA Times "Inspirational Women Awards” held on October 18, 2022.
Can you guess who was one of the sponsors of the LA Times awards? Yes, you guessed right — WSPA was a sponsor.
According to a tweet from @OfficialWSPA, "Today @latimes acknowledged a woman who is already well known in our industry as a trailblazer and inspiration to tens of thousands of women. Congrats to our fearless leader @WSPAPrez for being recognized as a shortlisted nominee for the Inspirational Women Awards."
In 2015, I wrote this article about how LA Times and the California Resources Corporation, a subsidiary of Occidental Petroleum Association, teamed up on a oil industry propaganda website: https://www.dailykos.com/story/2015/10/30/1442947/-LA-Times-and-Big-Oil-team-up-on-propaganda-website
Fortunately, the LA Times is no longer managing and running that website.