The Spark

the Voice of
The Communist League of Revolutionary Workers–Internationalist

“The emancipation of the working class will only be achieved by the working class itself.”
— Karl Marx

Oil Companies Swindle California Drivers

Oct 24, 2022

In California, gas prices skyrocketed. In October, the average gas price surged to $6.43 from $5.06 in August, while crude oil prices dropped worldwide. As if to win a competition, one Chevron station in Los Angeles set its gas price at $8.35 per gallon, a new U.S. record. Today, Californians pay about 70% more for gas than the U.S. average. How is this possible?

In California, five refinery companies, Chevron, Marathon Petroleum, PBF Energy, Phillips 66, and Valero, produce more than 97% of the state’s gasoline. And the companies that own the refineries have deliberately restricted gasoline production. In 1982, California had 43 refineries. Today, there are only 15 refineries. Gasoline production capacity also dropped. California’s total crude oil processing capacity reached more than 2.5 million barrels in 1982. Today, forty years later, it is less than 1.8 million barrels.

An internal Chevron memo from the 1990s very clearly explained this strategy: “A senior energy analyst at the recent API [American Petroleum Institute] convention warned that if the U.S. petroleum industry doesn’t reduce its refining capacity, it will never see any substantial increase in refinery margins [i.e., profits].”

As a result, production is usually so tight, when a refinery goes off line, it immediately creates a shortage, which the refineries then use as an excuse to raise prices. And that’s exactly what happened in September. Except it wasn’t just one refinery that went off line, but four refineries. Suddenly, the oil refineries created a major shortage, which they used as an excuse to jack up prices to record levels.

These are multinational companies that operate on a global scale. No doubt, the profits from their refining operations in California will contribute greatly to their ongoing profit boom.

Their business strategy? Artificially decrease gas supply, use gas shortages as an excuse to jack up gas prices, and rake in mind-boggling profits at the expense of the working class. This is pure capitalism!