California Gas Companies Spiked Prices, Class Action Claims

A recent class action lawsuit challenges rising gas prices in California, arguing that gas companies have conspired together to raise prices.

Plaintiff Asante Cleveland claims that she and other Californians have been damaged by high gas prices in the state.

Allegedly, high gas prices have been caused by an unlawful price-fixing scheme between a variety of gasoline companies including SK Energy, Vitol and others.

According to Cleveland, the rising gas prices can be linked back to a 2015 explosion at an ExxonMobil gas refinery.

Before the explosion, the Torrance, Calif. refinery reportedly supplied a significant amount of gas to the state. Around one fifth of the gasoline sold in Southern California and around one tenth of the gas sold across the state was allegedly supplied by the Torrance refinery.

Although the explosion was tragic and unexpected, the defendants reportedly used the incident to their advantage. According to the California gas prices class action lawsuit, the refinery explosion and subsequent shortages were used as a cover for a massive price-fixing scheme between gas companies.

Before the explosion occurred, the defendants had allegedly started to work together in secret. After the explosion, SK Energy and Vitol reportedly started to work together to restrain competition and secure the lead spots in the market.

The plaintiff claims that the defendants accomplished these illegal actions by “entering into unreported arrangements amongst themselves to share the profits made as a result of the scheme.”

Between February 2015 and the end of 2016, the defendants used “sham” transactions to conceal the actual supply and demand factors for gasoline in California, according to the plaintiff.

“By hedging each of their reported trades, the secondary transaction ensured that there was little to no market risk associated with the conduct of the Defendants,” the gas prices in California class action lawsuit claims.

“This conduct was designed to deceive — and did deceive — other market participants about the true supply and demand situation for gasoline in order to artificially increase the price of gasoline in California.”

These transactions allegedly concealed trading between the defendants which intended to create “spikes in the gasoline spot market.”

The “spot” market refers to the purchase and selling of gasoline and other fuel accompanied by a physical exchange of goods. Because California does not have direct access to gasoline through a pipeline, gasoline companies are instead forced to ship gasoline to the state via marine vessels.

As a result, there are two spot markets in the state where gasoline is exchanged: Los Angeles and San Francisco.

Although national trends influence the prices of gasoline in California, regional factors are also considered when pricing the fuel.

According to Cleveland, the ExxonMobil gas refinery explosion was used by the defendants to raise spot market prices and, later, gas prices in California.

“Beginning at least as early as late February 2015, and while using the explosion at the Torrance Refinery as cover for their illegal efforts, Vitol and SK Energy […]  reached agreements amongst themselves to raise, fix, and otherwise tamper with the price of refined gasoline in California,” Cleveland claims.

“The Defendants were able to carry out the scheme by manipulating OPIS-reported prices in order to actualize supra-competitive profits while limiting market risk.”

The alleged antitrust scheme was revealed on May 4 when California Attorney General Xavier Becerra filed a complaint against the defendants. Becerra argued that SK Energy and Vitol violated the Cartwright Act and California’s Unfair Competition Law with their price-fixing scheme.

Cleveland’s complaint includes similar allegations under the Cartwright Act and California’s Unfair Competition Law, although the California gas prices class action lawsuit also adds claims under the Sherman Act.

Cleveland seeks to represent Californians who purchased refined gasoline in the state between Feb. 18, 2015 and Dec. 31, 2016.

According to the class action lawsuit, raising gas prices in California resulted in financial harm to Cleveland and other consumers who purchased gas during the Class period.

“Plaintiff and members of the Class have suffered injury in fact and have lost money as a result of Defendants’ violations of the UCL in that they paid more for gasoline than they would have paid in a competitive market,” the California gas prices class action lawsuit concludes.

Cleveland seeks damages, restitution and other relief under both California and federal antitrust laws.

Have you noticed rising gas prices in California or your area? Share your thoughts in the comments section below.

Cleveland and the proposed Class are represented by David Azar, Peggy Wedgworth, Andrei Rado, and Blake Yagman of Milberg Phillips Grossman LLP.

The California Rising Gas Prices is Asante Cleveland v. SK Energy Americas Inc., et al., Case No. 3:20-cv-00893-WQH-LL, in the U.S. District Court for the Southern District of California.

Read More Lawsuit & Settlement News:

Ethicon’s Surgical Stapler Recall: What are the Risks?

Hospital OxyCide Cleaner Side Effects Lawsuit Investigation

Hulu Class Action Alleges App Streaming Issues

Kid Boutique Files Travelers Business Interruption Insurance Lawsuit