California AG Sues Gas Trading Companies, Alleging Price Manipulation

California sued two gasoline trading firms on Monday, May 4, alleging that they took advantage of market disruptions from a 2015 refinery explosion in Torrance by improperly driving up the price that motorists pay at the pump and gaining windfall profits, reported The Los Angeles Times. 

The lawsuit was filed by state Attorney General Xavier Becerra, who seeks an injunction and monetary damages against Vitol and SK Energy Americas.

“Price gouging, whether it is toilet paper or gasoline, it stinks,” Becerra said during a press call. “It’s the kind of greed that hurts your grandma, it hurts the good Samaritan, it hurts everyday Americans who have to fill up their gas tanks.”

Becerra alleged that the multinational companies named in the case “manipulated gas prices to illegally enrich themselves at the cost of California consumers at the gas pump” after a February 2015 explosion at the ExxonMobil refinery in Torrance that produced about 10% of the state’s gasoline. ExxonMobil is not named in the lawsuit and is not alleged to have done anything improper.

The attorney general alleges that Vitol and SK negotiated large contracts to supply gasoline and gasoline blending components, including one deal for more than 10 million gallons. He said he believes the alleged unfair competition practices and price manipulation by the two trading firms may have resulted in a more than 1-cent increase in the price of gas, a level that could generate US$150 million in profits for the volumes cited in the case.

“Unfortunately for California consumers, Defendants Vitol and SK participated in a scheme to drive up and manipulate the spot market price for gasoline so that they could realize windfall profits on these large contracts to deliver gasoline and gasoline blending components,” stated the lawsuit filed in San Francisco County Superior Court.

Full Content: LA Times

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