California activists call for oil company subpoenas

Reuters News
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Posted: Apr 01, 2015 3:15 PM

By Rory Carroll

SAN FRANCISCO (Reuters) - Billionaire environmental activist Tom Steyer and the head of a consumer watchdog group on Tuesday said California state lawmakers should subpoena oil industry executives if they fail to answer questions about February's gasoline price spike.

The call comes after oil executives were absent from a March 24 state Senate hearing in Sacramento examining the dollar-a-gallon price spike that hit motorists in February.

The price increase coincided with an explosion at Exxon Mobil Corp’s Torrance refinery and a shutdown in production at Tesoro Corp’s Golden Eagle refinery in Martinez due to a labor strike. The two companies control 55 percent of the state’s refining capacity.

“It’s outrageous that the oil industry would refuse to answer for the $550 million extra California consumers were forced to pay in February for their gasoline above the U.S. average, particularly as the hearings proved the oil companies were the ones profiting from the California price spike,” Steyer and Jamie Court, president of Consumer Watchdog, said in a letter to lawmakers.

About 14 California refineries produce the majority of the gasoline consumed in state, which must meet higher environmental standards than gasoline used elsewhere. California gasoline prices are routinely among the highest in the nation and fluctuate depending upon the ability of its refineries to produce fuel.

Steyer and Court said they want to know why the refineries did not act more quickly to increase supply when it became clear that prices were going to spike, and why the companies did not keep more inventory on hand.

They also question whether it was necessary for Tesoro to stop production at the Martinez plant during the strike.

"Why did Tesoro tell investors that the company can continue operating refineries indefinitely even with the steel worker strike, yet shut down its refinery, precipitating the price spike?" they said in the letter.

Exxon had no comment.

Tesoro representative Tina Barbee on Wednesday said the refinery was in the final stages of a major turnaround maintenance activity when the company received the strike notice on Feb. 1.

"The safest option at that time was to idle the remaining operating units and transition to operating the facility as a terminal," she said.

The strike has since been resolved and the company expects the 166,000 barrel-per-day facility to be back to normal operating levels over the next two weeks, Barbee said.

(Reporting by Rory Carroll; Editing by Lisa Shumaker)