Category Archives: CA Gov. Gavin Newsom

CA Gov. Gavin Newsom, California, Chevron, Climate action, Climate Change, ExxonMobil, Fossil fuels, Oil drilling

Shots fired: California sues oil companies

California goes on offense against Big Oil

The lawsuit makes California the largest economy to join the campaign against oil companies. | Ben Margot / AP Photo.

California is one of the country’s top oil and gas producers, and Chevron, one of the defendants, is headquartered in the state.

Politico, by Blanca Begert and Debra Kahn, September 16, 2023

Democratic California Gov. Gavin Newsom announced a lawsuit Saturday against five major oil companies and their subsidiaries, seeking compensation for damages caused by climate change.

The suit, filed in San Francisco County Superior Court by Democratic Attorney General Rob Bonta, accuses the companies of knowing about the link between fossil fuels and catastrophic climate change for decades but suppressing and spreading disinformation on the topic to delay climate action. The New York Times first reported the case Friday.

The suit also claims that Exxon, Shell, Chevron, ConocoPhillips and BP — as well as the American Petroleum Institute industry trade group — have continued their deception to today, promoting themselves as “green” with small investments in alternative fuels, while primarily investing in fossil fuel products.

It seeks to create a fund that oil companies would pay into to help the state recover from extreme weather events and prepare for further effects of climate change. It argues that California has already spent tens of billions of dollars on responding to climate change, with costs expected to rise significantly.

“The companies that have polluted our air, choked our skies with smoke, wreaked havoc on our water cycle, and contaminated our lands must be made to mitigate the harms they have brought upon the State,” the suit says.

Shell and API said the question of how to address climate change should be dealt with in the policy arena.

“We do not believe the courtroom is the right venue to address climate change, but that smart policy from government and action from all sectors is the appropriate way to reach solutions and drive progress,” Shell spokesperson Anna Arata said in an email.

“This ongoing, coordinated campaign to wage meritless, politicized lawsuits against a foundational American industry and its workers is nothing more than a distraction from important national conversations and an enormous waste of California taxpayer resources,” API Senior Vice President and General Counsel Ryan Meyers said in a statement. “Climate policy is for Congress to debate and decide, not the court system.”

California’s legal action joins dozens of similar lawsuits brought by seven other states and many municipalities seeking to hold major polluters accountable for allegedly lying about their role in causing climate change.

Eight California local governments filed some of the country’s first climate lawsuits in 2017 and 2018 that are now in state courts. At’s filing makes California the largest economy to join the campaign against oil companies. California is also one of the country’s top oil and gas producers, and Chevron, one of the defendants, is headquartered in the state.

A spokesperson for Newsom said the timing was motivated in part by the Supreme Court’s decision in April to allow existing suits from local governments to proceed in state court, rather than be moved to federal courts as oil companies wanted. State courts are seen as friendlier venues for plaintiffs seeking climate damages because they’re generally more receptive to considering state laws that deal with climate change.

“All these cases got tied up in years of procedural wrangling; oil companies doing everything they could to drag their feet,” said spokesperson Alex Stack. The “Supreme Court finally let these cases go forward this spring — the state as a whole is joining cities and counties.”

California officials have been contemplating legal action against oil companies for years, since at least the early 2010s, when former Democratic Gov. Jerry Brown was serving as California attorney general. The state did sue coal companies and automakers before that, alleging public nuisance harms stemming from climate change, but the Supreme Court rejected the arguments.

The links between oil companies and efforts to downplay the effects of climate change have become clearer since then, a former top California legal official said.

“At that time there was less information about the ongoing and continuing efforts by oil companies to mislead and misrepresent on the record,” said Ken Alex, a former senior assistant attorney general under Brown who led the office’s environmental section. “I don’t think we had the same level of information that they have now about that conduct.”

The evidence has continued to pile up. A study published this year from Harvard University and the University of Potsdam in Germany found that Exxon’s climate models from 40 years ago were spot on.

California joining the legal parade against oil companies could prove significant.

“Having California participate is a big deal,” Alex said. “These are difficult cases. They have five defendants who have endless resources; it’s not simple to prove what they need to prove in terms of misrepresentation.”

CA Gov. Gavin Newsom, Gasoline prices, Price gouging, Valero

Valero raked in $11.5 billion in 2022 profits, beating its $930 million for the previous year by a dozen times.

Valero 2022 Profits Skyrocket But Gas Pump Gouging In CA Moderates As CA Threatens Refiner Penalty

Consumer Watchdog, by Liza Tucker, 01/26/2023

Los Angeles, CA—Valero raked in $11.5 billion in 2022 profits, beating its $930 million for the previous year by a dozen times. However, Governor Newsom’s call for a special session in October to deal with price gouging appears to be having an impact on gouging in California as California-reported refinery margins were lower than any other region for the first time this year and in line with historic margins.

“Valero reported profits per gallon of gasoline in California during the fourth quarter at below 50 cents, a red line marker for price gouging,” said Consumer Watchdog Liza Tucker. “It reported per gallon profits off California gas at 36 cents, a reasonable profit in line with what the refiner earned here for the last 20 years. Meanwhile margins elsewhere remained high.

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“The threat of a legislative penalty on gasoline price gouging that Governor Newsom called for appears to be reining in gas prices in California already,” said Tucker. “Clearly, California lawmakers should enact that penalty.”

Consumer Watchdog has called for 50 cents as a demarcation line on profits per gallon above which refiners will pay a penalty. SBX 1 2, introduced by Senator Nancy Skinner (D-Berkeley) will set a penalty on California refiners when gas prices and the profits refiners make per gallon off consumers become abnormally high. The legislature has yet to set a profit level for the penalty.

Five refiners control California’s gasoline market by making 97% of the state’s gasoline. They usually report higher profit margins per gallon of gasoline for the US West Coast than any other region in which they operate, said Tucker.  Valero’s 4th quarter profits were the first indication the price gouging penalty has impacted the companies’ policies. In addition, November and December gasoline prices in California were more in line with the typical spread between average US and California prices of a little more than a dollar.

“Just raising the price gouging penalty has significantly curbed Valero’s profit taking in California and made gasoline more affordable for Californians and in particular the most vulnerable in the state who were paying as much as 20% of their after-tax income for gasoline,” said Jamie Court, President of Consumer Watchdog. “Imagine how much Californians will save once a penalty is enacted.”

Valero tripled its fourth quarter profits to $3.1 billion from $1 billion. But Valero reported West Coast refining margins per barrel—the difference between what crude oil costs a refiner compared to the wholesale charge for the finished product—that were the lowest among its regions of operation.  Since Valero only has Western refineries in California, the margins are California-specific.

Valero reported a margin of $15.43 for the West Coast, compared to $18.88 for the US Mid-Continent, $22.68 for the Gulf Coast, and $29.66 for the North Atlantic. Consumer Watchdog divides margin per barrel numbers to arrive at a per gallon profit.  That translated into a profit of 36 cents per gallon in California, 44 cents in the US Mid-Continent region, 54 cents on the Gulf Coast, and 70 cents in the North Atlantic.

In contrast, Valero bagged price gouging profits per gallon in the second and third quarters of 2022. In the second quarter of 2022, Valero reported an 83 cent per gallon profit at the pump and, in the third quarter, a 60 cent per gallon profit in the third quarter, according to Consumer Watchdog research. See refiner profit per gallon chart here.

According to Gary Simmons, Valero’s executive vice president, profits were buoyed by a continued tight market for crude. Simmons said that bad weather also interfered with the restocking that normally occurs at this time of the year. “That sets up the year nicely from the refinery margin perspective,” he said.

As it was, California’s big five oil refiners posted overall profits of $67.6 billion in the first nine months of 2022 – nearly quadruple the profits recorded for the same period in 2021. Chevron reports its fourth quarter and annual earnings tomorrow. It controls 30% of California’s gasoline market.

CA Gov. Gavin Newsom, Valero, Windfall profits

Valero Quintuples 3rd Quarter Profits: Makes Windfall Of $50 million Off California Consumers

60 cents per gallon profit – “These profits show Governor Newsom is justified in his call for a special session to mandate a price gouging refund.”

Consumer Watchdog, By Liza Tucker, October 25, 2022

Los Angeles, CA—Valero’s net income hit $2.8 billion for the third quarter of 2022, more than quintupling the $463 million reported for the same quarter last year.

Valero’s Western region profits, which are strictly from its California refineries, topped 60 cents per gallon. That is only the second time it has reported such a windfall of over 50 cents per gallon since 2001. The first time was the second quarter of 2022 when its California profits were 83 cents per gallon. Valero’s California profits were once again higher than any of its other regions in the country and the world.

“These windfall profits must be returned to California drivers if the oil refiners are to treat Californians like customers rather than ATMs,” said Jamie Court, president of Consumer Watchdog. “These profits show Governor Newsom is justified in his call for a special session to mandate a price gouging refund.”

In California, the Valero profits translate into an estimated quarterly windfall profit of $50.8 million that should go back to consumers, Consumer Watchdog said today, calculating all monies made over 50 cents per gallon as a windfall profit.

In the second quarter, Valero’s windfall profits made on margins of 83 cents per gallon was $161,700,000. Adding to Valero’s windfall profit from last quarter, Valero would need to refund $211 million in windfall profit back to California consumers if a price gouging refund law were in effect.

Governor Newsom has called a special legislative session in December to consider a windfall profits cap and price gouging rebate for California consumers.  Consumer Watchdog estimates that the amount of windfall profits to be returned to consumers by refiners reported so far this year is now over $1 billion. See the calculation.  

The formula used to calculate windfall profits is every dollar in profit made above 50 cents per gallon, which the company has only reported twice since 2001 — in the second and third quarters of 2022. View the chart of per gallon West Coast profits since 2001.

None of the four California oil refiners who reported windfall profits in the second quarter of 2022 had previously made more than 50 cents per gallon annually in all their years doing business in California. Chevron’s profits only exceeded 50 cents per gallon three times in the last twenty years.

Three other California refiners—PBF Energy, Phillips 66 and Marathon Oil—will be reporting third quarter profits in the coming two weeks. Chevron, which serves one third of the California market, only reports margins annually.

Valero’s haul of 60 cents per gallon off its California refineries is more than it has made at any other point in the last 20 years except for last quarter. Cents per gallon are calculated by dividing the gross refining margins on a barrel of crude by 42—the number of gallons in a barrel. Gross refining margins reflect the difference between the cost of crude oil bought and the price of petroleum products produced and sold by the refiner.

Oil refiners’ reports to investors only reveal Western regional margins, not California specific profits, which are generally higher.   Two of the five oil refiners, Valero and PBF, have their Western refineries in California only.

In the third quarter, Valero’s California refineries more than doubled margins per barrel to $25.36 from $11.29 in the same quarter last year. For the nine months, West Coast margins were $25.89 over $9.81 year before.  The margins were the highest reported among Valero’s four regions of operation, including the U.S. Gulf Coast, North Atlantic and U.S. Mid Continent.

A new law, SB 1322 (Allen), backed by Consumer Watchdog, will require oil refiners to post their profits per gallon from refining monthly beginning in January.  This will give California the basis to monitor for price gouging in real time and, if a price gouging rebate is enacted, to give the excess profits back to drivers.

On Valero’s earnings call with investors today, its Chief Executive Officer Joe Gorder noted that refining margins “remain supported” by strong product demand and low product inventory. Despite high output, Gorder said that global supplies remained “constrained” due to refineries being taken offline, “unfavorable economics,” and switching refineries away to producing low carbon fuels.