Consumer Advocates Accuse Gas Companies of Price Gouging

A watchdog group says a lack of competition in California has allowed gas companies to make an unprecedented markup at the pump.

Consumer Advocates Accuse Gas Companies of Price Gouging Photo (cc) by JeepersMedia

If you live in California and think you’re paying too much at the pump, you are likely not imagining it.

Consumer Watchdog, a Washington, D.C.-based advocacy group, said in a press release Oct. 13 that it found the gap between wholesale and retail gas prices is at an historic high in the state, signaling what they call price gouging.

Their analysis showed that in August and September, gas companies were selling gas for $1.20 more per gallon at the pump than they paid for it. The watchdog group isn’t arguing against the companies making a profit, but they say the historical average markup is 77 cents per gallon.

“All levels of the oil industry are raking it in” at the customers’ expense, said Jamie Court, president of Consumer Watchdog in a release. “The lack of competition in the market is the result of four refiners controlling 78 percent of the state’s supply and these companies using their market power to drive up prices and drive away competition.”

The group said the high prices were also the result of low inventory. However, they assert that gas inventories were low because gas companies were intentionally keeping them low, not as a result of market forces.

The group presented its findings during testimony at the California Energy Commission’s Petroleum Market Advisory Committee. They urged the state to mandate greater transparency and force companies to publish more economic data so people can better understand where high prices are coming from.

What do you think is a fair markup for gas? Share your thoughts in comments below or on our Facebook page.

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