(The Center Square) — The claim: “From July through September, Big Oil hiked gas prices at the pump, eventually peaking at $6.08 per gallon in California. That led to profits of over $33 billion for Big Oil in only three months,” said a press release from the governor’s office.
The release later quotes Gavin Newsom as saying “Big Oil hiked prices at the pump and took in huge profits. Instead of passing down savings to consumers, they sent billions to shareholders and Wall Street.”
The facts: While Newsom’s office cites high California gas prices as what “led” to the oil companies’ “huge profits,” the vast majority of oil company profits come from outside California where gas prices are generally much lower.
Asked about this discrepancy, a spokesman for the governor wrote, “The press release says that high prices in CA contributed to these profits, which is accurate. California is one of the biggest markets for gasoline in the world. We didn’t say it was the sole driver of global profits.”
Let’s take that answer in three parts:
“The press release says that high prices in CA contributed to these profits, which is accurate.” That is false. Nowhere in the press release does the word “contributed” or any synonym appear. The press release says “Big Oil hiked gas prices at the pump, eventually peaking at $6.08 per gallon in California. That led to profits of over $33 billion.””California is one of the biggest markets for gasoline in the world.” That is true. California is the 2nd biggest gasoline market in the United States behind Texas. In the world, California is behind China and Russia, but uses more gasoline that Canada, Japan and India each do. However, California represents only about 4% of global gasoline sales.”We didn’t say (California) was the sole driver of global profits.” This is also true. The governor’s office did not say that all profits came from California.
The press release is misleading in other ways as well. Gov. Newsom is quoted saying “Big Oil hiked prices at the pump and took in huge profits,” without mentioning that those huge profits are down 30% to 50% for the three most profitable oil companies cited in the release — Exxon, Shell and Chevron.
In addition, the release quotes Newsom as saying “Instead of passing down savings to consumers, they sent billions to shareholders and Wall Street.” What he doesn’t tell you is that the top shareholders of each of those companies is either a mutual fund company — representing funds invested by average investors or Warren Buffett, an Omaha billionaire and major Democratic Party donor who frequently stands in opposition to Wall Street and has pledged to give away the majority of his wealth. Buffett’s firm, Berkshire Hathaway, also has tens of thousands of relatively small investors who treat its stock like a mutual fund, granting them small ownership in a diverse array of companies vetted by Buffett and his partners.
This is what the federal Energy Information Administration says about California’s high gasoline prices: “California gasoline prices are generally higher and more variable than prices in other states because relatively few refineries produce California’s unique blend of gasoline. California’s reformulated gasoline program is more stringent than the federal government’s program. California’s tax on gasoline is also higher than most states’ gasoline tax.”