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U.S. Sen. Barbara Boxer

[Sen. Boxer] – U.S. Senator Barbara Boxer, D-Calif., called on the Department of Justice’s Oil and Gas Price Fraud Working Group on Monday to investigate the recent spike in gas prices hitting Californians at the pump.

“Californians have too often been victimized as unscrupulous traders have created or taken advantage of supply disruptions to drive up energy prices,” Boxer wrote. “We cannot allow market manipulation by those who would seek to profit off the pain of our families at the pump.”

In the letter, Senator Boxer pointed to published reports this week that cited energy traders saying that the sudden rise in gas prices had “many of the hallmarks of a classic short squeeze.” Boxer urged the Oil and Gas Price Fraud Working Group to investigate whether traders colluded to drive up the price paid by California families at the pump.

In her letter, Senator Boxer acknowledged the maintenance issues facing California refineries beginning with the shutdown of Chevron’s Richmond refinery in August due to a fire, the power outage at Exxon Mobil’s Torrance refinery, and the September shutdown of a Chevron pipeline that supplies crude from the Central Valley to the Bay Area. But noting a pattern of similar maintenance issues at West Coast refineries that led to price spikes earlier this year, Boxer wrote, “it is critical that we ensure that these shutdowns are not part of any broader effort to deliberately keep gasoline supplies tight—and prices high—at the expense of consumers.”

The full text of the Senator’s letter is below.


October 8, 2012

The Honorable Eric H. Holder, Jr.

Attorney General of the United States

U.S. Department of Justice

950 Pennsylvania Ave., NW

Washington, D.C. 20530-0001


Dear Attorney General Holder:

I am writing to request that the Oil and Gas Price Fraud Working Group initiate an investigation into the surge in gas prices in California.

I was particularly concerned to see a Reuters report that cited energy traders saying that a 97-cent price spike for prompt-delivery CARBOB gasoline this week had “many of the hallmarks of a classic short squeeze.” According to those industry sources, when West Coast refiner Tesoro Corporation was caught short of the supplies it needed, traders were able to quickly profit as prices skyrocketed. The Oil and Gas Price Fraud Working Group, working with its partner agencies, should immediately investigate whether any of these traders colluded to manipulate and drive up gas prices at the expense of Tesoro and California consumers.

Californians have too often been victimized as unscrupulous traders have created or taken advantage of supply disruptions to drive up energy prices. We cannot allow market manipulation by those who would seek to profit off the pain of our families at the pump.

I also urge the Working Group to closely examine the maintenance issues that continue to plague West Coast refineries. Last week, a power outage forced Exxon Mobil’s Torrance refinery to temporarily shut down, and it has been operating below capacity since then. This incident followed the shutdown of Chevron’s Richmond refinery in August due to a fire, and the September shutdown of a Chevron pipeline that supplies crude from the Central Valley to Bay Area refineries due to elevated organic chloride levels in the crude stream. This follows a pattern of refinery shutdowns earlier this year that also led to price spikes. While all these incidents may be unrelated, it is critical that we ensure that these shutdowns are not part of any broader effort to deliberately keep gasoline supplies tight—and prices high—at the expense of consumers.

The situation in California is very serious. In some areas, consumers are waiting in long lines to buy gas at record prices. Many stations have had to turn customers away because they have run out of supplies. Too many families are paying close to or above $5 a gallon for gas. These conditions are hitting families hard and hindering California’s economic recovery.

On behalf of my constituents, I urge you to investigate these recent price spikes. I look forward to your prompt reply.


Barbara Boxer

United States Senator

Comment On This Story

1 Comment

  1. Jason says:

    From the news reports the gas stations with the highest prices buy on the spot market, like Costco. They had to raise prices so they wouldn’t run out since their supplies were cut first. Barbara will discover the same thing the investigation found during Katrina, small gas stations price gouged, but no major oil companies. Barbara was not happy with the result and personally insulted the FTC rep until she started to cry.

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