Chevron hasn't complied with new California gas pricing law

Chevron has not complied with a new California law requiring it to disclose data on pricing

California Chevron Gas Prices (Copyright 2021 The Associated Press. All rights reserved)

Chevron has not complied with a new California law requiring it to disclose how much money it is making from selling gasoline in the state, setting up a showdown with state regulators over data that Gov. Gavin Newsom's administration requested in order to impose the nation's first penalty on excessive oil profits.

The law requires oil companies to report their monthly “gross refining margin," meaning 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 that 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. The average price for a gallon of gas in California on Tuesday was $4.90, which is $1.44 higher than the national average, according to AAA.

California's average price-per-gallon for gasoline hit an all-time high last summer of $6.44 per gallon. That prompted Newsom and state lawmakers to send cash rebates to most drivers and enact a new law requiring oil companies to disclose more data about their prices. Newsom followed that up with a bill in the state Legislature this year to penalize oil companies for making excessive profits, a proposal that is closely tied to the data that Chevron has not reported.

Representatives for Chevron did not respond to a request for comment.

The deadline for oil companies to report pricing data for January was March 2. Of the big five oil companies that provide 97% of the state's gasoline, four of them met that deadline: Marathon, PBF Energy, Phillips 66 and Valero, according to the California Energy Commission, which is collecting the data.

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. The commission has now given Chevron until the end of Tuesday to comply or to face fines of up to $2,000 per day.

In a letter to the California Energy Commission, 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.”

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.

But 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.

Chevron not complying with the new pricing law could anger some lawmakers enough that it might influence their votes, said Jamie Court, president of Consumer Watchdog, an advocacy group that is pushing for a penalty on oil profits.

“This is just a big (refiner) giving the finger basically to the state,” Court said. “I don't think that’s going to bode well when the legislation hits.”

State Sen. Ben Allen, a Democrat from Santa Monica who authored the law requiring oil companies to disclose more data, said he still has some questions about Newsom's proposal for a penalty on excessive oil company profits. But he said it was “disappointing” that Chevron had not complied with the law he wrote.

“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,” Allen said. “We’re going to hold them accountable.”

The energy commission has already denied a request from the Western State's Petroleum Association, an oil industry lobbying group, to delay enforcing the law requiring more data on pricing. The association is set to ask the commission to reconsider its ruling on Tuesday.

Sophie Ellinghouse, the association’s vice president, general counsel and corporate secretary, wrote in a letter to the commission that the request for profit numbers will generate “burdensome, inaccurate, and inconsistent” information.