California Attorney General Rob Bonta announced a $50 million settlement with three oil market trading companies accused of manipulating gas prices in 2015. The companies involved in the settlement are Vitol, Inc., SK Energy Americas, Inc., and its parent company SK Trading International (SK). The lawsuit, filed by Bonta in May 2020, alleged that these companies took advantage of a refinery explosion in Torrance, California, to drive up gasoline prices and suppress competition in the market.
Bonta emphasized the importance of holding petroleum companies accountable for illegal market manipulation. He stated, “Petroleum companies should not get to reap mass profits out of the pockets of hard-working Californians through illegal market manipulation.” He further condemned such practices, especially during times of crisis when people are most vulnerable. The settlement signifies the state’s commitment to protecting consumers from price gouging and ensuring a fair and competitive marketplace.
As part of the settlement, Vitol and SK Energy Americas agreed to new reporting requirements if they decide to reenter the California market. These requirements include daily reports for each transaction that occurred the preceding day, as well as weekly reports that encompass gasoline inventory records. Additionally, the companies are obliged to provide copies of all contracts or agreements with refiners, oil producers, petroleum product transporters, marketers, pipeline operators, terminal operators, or any other entity involved in trading petroleum products. These measures aim to enhance transparency and prevent future market manipulation.
In an effort to combat the influence of “Big Oil,” California passed a law creating a new government agency called the Division of Petroleum Market Oversight. This agency is responsible for collecting reports and data from the state’s oil industry. Furthermore, the state Energy Commission has been granted the authority to cap profits and penalize companies that exceed the state’s allowable profit margins for the oil industry. These regulatory measures demonstrate California’s determination to ensure fair pricing and protect consumers from exploitation.
The settlement reached with the three oil market trading companies is separate from a private class action lawsuit filed against them in federal court. While Vitol, Inc., SK Energy Americas, Inc., and SK Trading International did not provide any comments regarding the settlement, their agreement to the reporting requirements suggests their willingness to cooperate and adhere to the state’s regulations.
Overall, this settlement represents a significant step in holding oil market trading companies accountable for their actions. By imposing strict reporting requirements and creating a government agency dedicated to overseeing the petroleum market, California aims to prevent future instances of market manipulation and protect consumers from unfair pricing practices. The state’s commitment to transparency and regulation sets an example for other jurisdictions facing similar issues, highlighting the importance of maintaining a fair and competitive marketplace for the benefit of all.
