Santa Monica, CA – 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 slides were included in a letter from Consumer Watchdog to California’s large public pension funds, known as CalPERS and CalSTRS, calling on the funds to divest from Tesoro and another refiner, Valero, which are the chief sponsors of Proposition 23 on the November ballot. The Investment Committee of CalPERS is meeting in Long Beach today.
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. A second slide attributes the “West Coast Premium” to the fact that inventories of refined gasoline have actually gone down in the West in recent years while the supplies have increased in other regions. Refiners’ ability to keep supplies tight in the West, and especially California, has made California a profit center for refiners at the cost of beleaguered California drivers, according to Consumer Watchdog. The entire Tesoro presentation can be downloaded at http://www.consumerwatchdog.org/resources/TesoroInvestorPresentation.pdf (see page 20 and 21).
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. That report can be viewed at http://www.oilwatchdog.org/2010/10/study-texas-based-valero-gouging-california-drivers-for-a-decade/.
In its letter to the pension funds Consumer Watchdog wrote:
“We write to urge you to divest these substantial public resources from these companies who profit off of Californians’ financial pain. CalPERS and CalSTRS should not be investing in Texas oil companies that hurt the California economy, no more than they should invest in companies that spend millions of shareholder dollars to undermine California’s environmental laws and the state’s green energy industries and green tech jobs.”
The letter can be downloaded at http://www.consumerwatchdog.org/resources/Ltr_PERS-STRS_10-15.pdf.
State Treasurer Bill Lockyer, a member of the CALPERS Board and Investment Committee said, in a statement issued Friday:
“[Valero and Tesoro] don’t care about California or what’s right. They care about one thing: protecting the rich profits they rake in from California drivers who pay the highest gasoline prices in the country…The people of California will not stand for it. CalPERS and CalSTRs should not stand for it either.”
A copy of Lockyer’s statement can be downloaded at http://www.consumerwatchdog.org/resources/LockyerStatement10-14-10.pdf.