For the week that ended Oct. 8, when the average price for a gallon of gasoline in California hit a record high of $4.67, the portion of the retail price going to refiners, or margin, jumped to $1.22 a gallon. That was up 75% from the previous week. And it was nearly triple the average margin of 42 cents a gallon this year, according to California Energy Commission data.
Shielded from outside competition, these refiners benefit from keeping supplies tight. Even as gasoline consumption has declined in California in recent years because of high unemployment and increased vehicle fuel efficiency, refiners have been able to keep prices about 35 cents a gallon higher than the rest of the country. At the same time, the number of refineries operating in California has declined to just 14 today from 27 in the early 1980s.
Most recently, BP in August agreed to sell its 265,000 barrel-a-day Carson refinery, along with the Arco brand, to Tesoro for $2.5 billion. If the transaction is approved by regulators, just two companies — Tesoro and Chevron — will control more than half the state's gasoline refining capacity.