Gasoline price gouging in California draws a warning

California’s oil market watchdog is warning of price gouging by some gas stations charging more than $7 or even $8 a gallon as the war in Iran sends oil prices soaring.

The average price of gasoline in California is currently $5.66, but as of Friday, a Chevron station in Essex is charging $9.69, another in Los Angeles’ Chinatown is charging $8.71 and one in Vidal Junction is charging $7.79, according to GasBuddy, which tracks prices across the country.

“Our team vigilantly monitors the retail, wholesale and spot markets,” Tai Milder, director of the California Energy Commission’s petroleum market monitoring division, said in a statement. “Any reports of unfair practices or market manipulation will be taken seriously, and we will not hesitate to refer any illegal conduct for further investigation and prosecution.”

Gas prices have jumped about 30% nationwide since the United States and Israel attacked Iran three weeks ago and Iran blocked 20% of the world’s oil supply. Californians, who were already facing prices more than a dollar a gallon higher than the national average, are particularly feeling the pressure.

Extremely high prices at some gas stations in California “are not supported by current crude oil prices or gasoline futures prices,” the division said.

California’s Oil and Gas Monitoring Division was created in 2023 to provide a better understanding of the state’s oil market after summer gas price surges topped $6 a gallon two years in a row.

The state consistently experiences the highest fuel prices in the nation due to state taxes and fees, environmental programs, a cleaner fuel blending requirement and an insulated oil market, where 80 percent of gasoline comes from state refineries.

This isolation makes California gas prices more susceptible to refinery outages and market manipulation. In 2024, the division reported that after accounting for environmental rules and taxes, Californians still pay 41 cents more per gallon and most of that goes to industry profits. They also found that the price spikes of the previous two years were caused by refineries closing without backup supplies and by “potentially manipulative trading” in these undersupplied conditions.

Lawmakers and regulators have been quieter on price gouging recently and the Energy Commission suspended its decision to impose a profit cap on refiners after a series of refinery closures raised concerns about future fuel supply shortages.

Jamie Court, president of the nonprofit taxpayer advocacy group Consumer Watchdog, said the fact that the gap between national and California prices has widened since the war began is evidence of rising prices.

“We know they made 49 cents a gallon in January,” Court said, of the refineries. “We now know that their margins are closer to $1.25 a gallon,” he said, citing the group’s analysis of state and Oil Price Information Service data.

Chevron said in a statement that most of its gas stations are owned and operated by independent businessmen who are “free to set the retail price of fuel and other products.”

“These costs are generally determined by fundamental economic forces such as demand, supply and competition,” said spokesman Ross Allen, who added that crude oil prices, which make up the bulk of gas prices, have increased, but California environmental taxes and fees can also add more than $1.20 per gallon.

Valero, Marathon Petroleum and Shell did not immediately respond to requests for comment.

The oil watchdog agency said it has contacted stations where prices appear “excessive and disproportionate to these sellers’ cost increases,” including “several stations in Los Angeles and San Bernardino counties, in addition to several stations in Northern California” since the war began.

He also encouraged Californians “to shop around and compare the prices of branded and non-branded (or generic) gasoline.” »

“While retailers generally charge more for branded gasoline, all gasoline sold in California must meet the state’s high standards for emissions controls and engine performance,” the release read.