Finally it's been made public- Tesoro itself admitted in a slide presentation to investors that it keeps supply deliberately tight on the West Coast to support higher prices and to keep profits at the company healthy.
In a press release, Consumer Watchdog hounds Tesoro and Valero, owners of several West Coast refineries that process crude oil into gasoline, for keeping supplies deliberately tight to keep pressure on prices.
You'll know if you're a frequent reader of the blog that I've followed the lower utilization rates of refiners on the West Coast, commenting throughout the summer that refineries on the West Coast have commonly had the lowest production rates out of any region in the nation.
This summer (June 4-Sept. 3), West Coast refiners used just 80.5% of their capacity. This compares with other regions:
Midwest averaged 93.1% of capacity
East Coast averaged 87.6% of capacity
Gulf Coast averaged 90.9% of capacity
Rockies averaged 89.6% of capacity
According to the release, "Consumer advocates revealed an investor slide presentation by Texas-based oil company Tesoro explaining that oil refiners keep gasoline supplies especially tight on the West Coast to keep profits high through higher pump prices."
"The Tesoro slides, from a 2009 investor presentation, highlight the "West Coast Premium" gained by refiners, which are able to earn substantially more on each barrel of refined oil on the West Coast than other regions because of the considerably higher price paid by consumers at the pump. According to the presentation, West Coast refineries have an average margin that is $8.50 per barrel higher than those operating on the Gulf Coast."
"Last week, Consumer Watchdog also published a report showing that since 2002 Valero Energy's net refining margins in California have been 37% higher per barrel than the company's margins in other parts of the country. During that period, Valero reported $4.5 billion in operating profits from its California refineries."
It's about time someone got on West Coast refiners- I'm happy that a press release was issued, and so now I'm giving it to all of you to talk about and let your politicians know. Deliberate control and manipulation of West Coast motorists should be taken very seriously and oil companies found guilty should pay a heavy price.