A lawsuit filed by California officials accuses two multinational firms of taking advantage of the market disruption following a February 2015 refinery explosion to drive up gasoline prices for their own profit.
In the complaint, Attorney General Xavier Becerra alleges that Vitol, Inc. (Vitol) and SK Energy Americas, Inc., along with its parent company SK Trading International (SK) violated California’s antitrust laws and engaged in unlawful, unfair, and fraudulent practices that raised the price of gasoline in the state.
“Price gouging, whether it’s toilet paper or gasoline, stinks,” Becerra said.
In February 2015, California’s gasoline supply experienced serious disruptions after an explosion at a large gasoline refinery complex then owned by ExxonMobil in Torrance, California. The explosion left the refinery in need of extensive repairs, curtailing production at the Torrance facility which normally produced 10 percent of the state’s supply of gasoline.
The lawsuit charges that Vitol and SK took advantage of the disruption in refined gasoline supplies by organizing an anti-competitive scheme to drive up the price of gasoline and their own profits.
According to the lawsuit, Vitol and SK engaged in manipulative trades to increase their profits in violation of the Cartwright Act and California’s Unfair Competition Law. These trades were selectively reported to the Oil Price Information Service, LLC (OPIS) – the most widely used gasoline reporting service in California – to drive up the benchmark prices of Regular and Premium gasoline in OPIS’s Spot Market Report.
The companies, through two traders who were friends and former colleagues, colluded to drive up the price of OPIS-reported trades during pricing windows for large sales in order to increase the price of gasoline in the state to their profit, the lawsuit alleges.
Both firms are accused of engaging in unusual and otherwise irrational market-spiking trades with each other and third parties that had the effect of driving up prices prior to large trades, artificially moving and inflating the price of Regular and Premium gasoline so that the prices were unaccountably higher than the supply and demand prevailing at the time.
By driving up benchmark prices, the companies were able to sell their own product at a higher price, inflating costs for consumers, the lawsuit charges.
The complaint also alleges that the firms took steps to engage in specific trades for the purpose of inflating the published price on the CA spot market. The companies are also accused of executing certain trades to hide the scheme and share profits.
See all comments