When California gasoline prices topped $5 a gallon early last month, the state’s big refiners said they were performing maintenance at some of the plants and a couple were recovering from forced shutdowns due to fires. Now, a consumer advocacy group, Consumer Watchdog, has asked the state’s attorney general to launch a criminal investigation into the refiners’ words and deeds during that period.

In a letter to Attorney General Kamala Harris, Consumer Watchdog accuses the refiners of “running their refineries and building inventories even when they said they were performing maintenance.” The group also wants the attorney general to block the sale of BP PLC’s (NYSE: BP) Carson refinery to Tesoro Corp. (NYSE: TSO), saying “a California refining market that is already concentrated and uncompetitive will become a duopoly with Chevron and Tesoro controlling 54 percent of the market if the merger goes through.”

The consumer group charges that the Chevron Corp. (NYSE: CVX) Richmond refinery was never shut down in May as the company claimed, and that the Martinez refinery, owned by Royal Dutch Shell PLC (NYSE: RDS-A) was making gasoline for at least half time it was supposed to be closed.

Regarding the fire at Chevron’s Richmond plant, the group said:

October’s huge price hike that pushed gasoline up 50 cents a gallon in the space of a week was partly blamed on Chevron’s Richmond fire in August. But [research firm] McCullough [Research] says that Chevron’s supplies at the time were only growing.

Consumer Watchdog concludes that the refiners were not telling the truth:

It appears that California’s oil refineries falsified public information to drive up the price of gasoline, an allegation that, if true, is criminal conduct and reminiscent of the Enron-like manipulation of the California energy market. This unprecedented information demands a criminal investigation.

The letter to the attorney general is available here.

Paul Ausick

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