As of Wednesday, the national average for a gallon of regular gasoline was $2.64, according to AAA. That’s $1.03 cheaper than it was exactly one year ago. Still, prices at the pump have been on a steady incline lately, rising 21 days in a row. The average is now 8¢ higher than one week ago, and it’s up 25¢ over the last month. The last time gas was this expensive nationally was early December, per data from the U.S. Energy Information Administration.
California drivers have special reason to be upset about gas prices. They are currently paying the highest prices in the country, averaging $3.71 per gallon. That’s significantly more than even Alaska ($3.13) and Hawaii ($3.20), the two states that are usually outliers in terms of having the nation’s priciest gas.
The high gas prices in California have been blamed on issues with refineries, including at least one worker strike and one fire that caused a shutdown. Refinery problems have affected gas prices throughout the West: Prices at Nevada gas stations, for instance, leaped 20¢ to 30¢ per gallon in the last week alone, reaching $3.20 as of Wednesday.
However, a new report from the Consumer Watchdog group says that West Coast refinery profits have soared in early 2015, leading them to believe that the “problems” are being used as an excuse to fleece drivers.
“The proof’s in the oil companies’ own profit reports,” Jamie Court, president of Consumer Watchdog, said in a press release. “California drivers are getting gouged and California refineries are getting richer every time a refinery goes down and gasoline prices go up.”
Consumer Watchdog’s review of the data shows that over the past 10 years, spikes in prices at the pump have corresponded with profit surges for Valero and Tesoro, two major California refineries. During the first quarter of 2015—when California prices remained stubbornly high compared with most of the country, where drivers were enjoying exceptionally cheap gas—Valero recorded a profit of $82 million, far above its $25 million in profit for an average quarter.
To some extent, it sure looks like high prices at the pump on the West Coast are not reflective of higher costs being incurred by refineries. “The refiners’ costs are stable, but they are gouging on the prices they charge at the gas station,” Liza Tucker, a co-author of the Consumer Watchdog report, explained to the San Jose Mercury News. “We’re not saying that oil companies can’t make a profit but we are saying that they can’t gouge consumers.”
Consumer Watchdog is asking for government intervention to prevent refineries from restricting supply and inflating gas prices purely for their own profits.
As for gas prices around the country, the consensus seems to be that the recent spike in the cost of fueling up is a blip on the radar, and that prices will flatten out or perhaps even retreat a bit in the near future. Crude oil prices are expected to fall thanks to the continued strength of the U.S. dollar, among other factors, and that should translate to cheaper prices at gas stations.
Refinery disruptions should cease to be problems soon too, GasBuddy analyst Patrick DeHaan said in a CNBC interview. “Average prices nationally will be in the mid-$2 range for much of the summer,” he said.
Still, California drivers should expect to keep on seeing prices at the pump that are far higher than the national average.