Valero Energy Corp. has released a statement responding Gov. Gavin Newsom’s accusations that oil companies are “fleecing” California drivers with disproportionately rising gas prices that cannot be explained.
The average gas price in California was $6.30 per gallon as of Oct. 10, while the national average was $3.19.
Experts have blamed the discrepancy on oil refinery maintenance and the state’s limited gas supply.
However, the governor proposed a different answer.
“The fact is, they’re ripping you off. Their record profits are coming at your expense,” Newsom said in a Twitter video posted on Sept. 30.
David Hochschild, California Energy Commission Chairman, sent a letter to oil refinery executives seeking answers to California’s dramatic gas prices increase.
“This degree of divergence from national prices hasn’t happened before, regardless of planned or unplanned refinery maintenance, and no explanation has been provided. The oil industry owes Californians answers,” the letter said.
Valero Energy Corp. fired back with a statement last week.
“As the Commission knows, and as countless investigations have demonstrated, market drivers of supply and demand, together with government-imposed costs and specifications, determine the market price,” Valero’s said.
The vice president for State Government Affairs at Valero Energy Corp, Scott Folwarkow, blamed the state’s rigorous environmental regulations and high refinery operating costs on why prices at the pump are so disproportionately.
“California policies have made it difficult to increase refining capacity and have prevented supply projects to lower operating costs of refineries,” Valero’s letter said.
Newsom has called for the state’s legislature to impose a windfall tax on oil companies’ profits that would go back to California’s taxpayers.
However, Valero Energy Corp. doesn’t believe a new tax is the best course of action.
“Adding further costs, in the form of new taxes or regulatory constraints, will only further strain the fuel market and adversely impact refiners. Ultimately, those costs will pass to California consumers,” Valero’s response said.
To help offset high gas prices and inflation, California began sending out tax refund checks worth up to $1,050 to eligible residents.
Patrick De Haan, the head of Petroleum Analysis at Gas Buddy, believes lower gas prices could be on the way for Californians as scheduled refinery maintenance wraps up within the coming weeks.
“I expect California prices to go back under $6, if not back to what they were before the price increase,” De Haan said. “We can see the California statewide average back in the low $5 range, which is a dollar per gallon lower than where prices stand today, potentially by the end of November if everything goes well.”