WASHINGTON, D.C. - Six West Coast senators are demanding the Department of Justice conduct a refinery-by-refinery investigation into what caused the gas price spike in Western states over the last few months.
In a letter sent today to Attorney General Eric Holder, the Senators from Washington, Oregon and California called on the Department of Justice's Oil and Gas Price Fraud Working Group to investigate whether market manipulation or false reporting by oil refineries contributed to near-record gas prices on the West Coast earlier this year.
The letter comes on the heels of a report from McCullough Research indicating that some West Coast oil refineries may have been producing oil last May despite public reports that they were shuttered for maintenance.
The report, which was presented at a California State Senate hearing on Nov. 15, also details that West Coast oil inventories were either increasing or remaining level at historic five-year averages during the price spikes this year. In addition, the national price of crude oil, the main driver of gasoline prices, was decreasing in October and May, complicating market fundamental explanations for the price spikes.
Attorney General Holder created the Oil and Gas Price Fraud Working Group on April 21, 2011 to explore potential manipulation, collusion, fraud or misrepresentation that harms consumers in the oil and gas markets. The Working Group includes include representatives from the Department of Justice, the National Association of Attorneys General, the Commodity Futures Trading Commission, the Federal Trade Commission, the Department of the Treasury, the Federal Reserve Board, the Securities and Exchange Commission, as well as the Departments of Agriculture and Energy.
An extensive analysis of emissions monitoring data by McCullough found that the Chevron refinery in Richmond, Calif., emitted byproducts of petroleum production throughout May. Yet public reports claim the refinery shut down production from May 12 to May 26. According to the McCullough report, the October price spike added up to a 66 cent-per-gallon windfall profit for oil companies - or about $25 million a day. The difference between what drivers actually paid and what they should have paid exceeded $1 billion.