California Attorney General Rob Bonta announced on October 2nd that millions of Californians may be eligible to receive compensation from a $50 million settlement reached between the state government and oil companies.
“I am proud to be able to return this money to those Californians who have been affected by fuel price manipulation,” Bonta said in a press release. “Market manipulation and price fraud are illegal and unacceptable, especially during people’s most vulnerable times of crisis.” Californian residents who purchased fuel in the Southern California region, including counties such as Los Angeles, San Diego, Orange, Riverside, San Bernardino, Kern, Ventura, Santa Barbara, San Luis Obispo, and Imperial counties between February 20 and November 10, 2015, can submit claims on the website created by the Attorney General’s office.
Those who choose not to submit a claim can opt out or submit statements of concern regarding the settlement agreement.
Since the settlement covers the counties with the highest population in California, a substantial portion of the over 25 million drivers in 2015 may be eligible for compensation. The amount each eligible individual receives will depend on the number of applications submitted by the deadline of January 8, 2025. Each eligible applicant is limited to submitting one claim.
However, no payments will be approved until the final settlement is determined by the court. The next hearing is scheduled for February 28, 2025, in San Francisco. The public will be invited to participate, and the presiding judge may choose to listen to public input before making a decision in court. Bonta noted that appeals by the oil companies could also prolong the distribution of payments. The Attorney General’s office stated on the claims website, “The resolution of these appeals is always uncertain and resolving them could take time, possibly over a year.”
In July 2020, the California Department of Justice filed a lawsuit against Vitol, SK Energy Americas, and their parent company SK Trading International, accusing these fuel trading companies of colluding in secret to manipulate fuel prices in the California spot market, causing gas station prices to rise and profits to soar. According to the lawsuit, these companies exploited an explosion at a refinery in Torrance, Southwestern Los Angeles in February 2015, and the subsequent market disruptions, illegally suppressing competition for their gain. The charges pointed out that these actions violated antitrust and unfair competition laws.
Bonta announced in July the $50 million settlement of these allegations. The agreement requires the distribution of $37.5 million among eligible applicants (after deducting taxes, administrative expenses, attorney fees, and costs). The remaining $12.5 million will be used by state and local governments to address consumer protection complaints, with half of the funds allocated to the Attorney General’s office.
The settlement also mandates that these companies must report daily to the California Energy Commission on the previous day’s transactions upon deciding to resume operations in California. They must also report inventory levels, specific benchmarks, and contracts or agreements with refineries, oil producers, transporters, and end-users on a weekly basis.
A Senate bill, SBX1-2, passed last year, sponsored by State Senator Nancy Skinner, grants the California Energy Commission the authority to regulate the profit margins of oil refineries. Supporters argue that further regulation of oil companies could be expanded; however, a combination bill, ABX2-1, proposed during a special meeting convened by the governor on the final day of the legislative calendar (August 31), aims to lower oil prices by limiting profits and expanding reserve supplies.
Critics, however, believe that these bills could lead to reduced supply, price increases, unemployment, and more volatility in the California oil and gas market. An alliance of 50 organizations, including the California Chamber of Commerce, several local chambers of commerce, business associations, and the Western States Petroleum Association, strongly opposes ABX2-1. The alliance stated in a legislative analysis that ABX2-1 is “unlikely to provide any price relief for consumers or businesses and may, in fact, make the situation worse.”