A California trucking company has filed a class-action lawsuit alleging the prices they paid at the pump for gasoline were artificially manipulated by two multinational gasoline firms. The two firms were served with a lawsuit by California Attorney General Xavier Becerra earlier this month alleging the two companies took advantage of a 2015 refinery explosion, scheming to drive up gas prices for their own profits.
According to the CA Attorney Generals May 4th press release, the two gas companies Vitol, Inc. (Vitol) and SK Energy Americas, Inc., along with its parent company SK Trading International (SK), took advantage of the market disruption following a February 2015 explosion at a gasoline refinery in Torrance, California to engage in a scheme to drive up gas prices for their own profit.
The C.A. Attorney General press release reads as follows:
The lawsuit alleges that Vitol and SK engaged in manipulative trades to increase their profits in violation of the Cartwright Act and California’s Unfair Competition Law. These trades were selectively reported to the Oil Price Information Service, LLC (OPIS) – the most widely used gasoline reporting service in California – in order to drive up the benchmark prices of Regular and Premium gasoline in OPIS’s Spot Market Report. The companies, through two traders who were friends and former colleagues, colluded to drive up the price of OPIS-reported trades during pricing windows for large sales in order to increase the price of gasoline in the state to their profit. The firms engaged in unusual and otherwise irrational market-spiking trades with each other and third parties that had the effect of driving up prices prior to large trades – and they were successful in doing so, artificially moving and inflating the price of Regular and Premium gasoline so effectively that the prices moved or stayed unaccountably higher than the supply and demand prevailing at the time of the pricing windows. By driving up benchmark prices, the companies were able to sell their own product at a higher price, and inflate costs for consumers.
The complaint also alleges that the firms not only took steps to engage in specific trades for the purpose of inflating the published price on the CA spot market, they also executed certain trades to hide the scheme and share profits. The two companies tried to hide the nature of their market manipulation scheme by executing and facilitating trades that were not reported to OPIS and effectively negated the volume of gasoline purportedly exchanged in the reported trade. They also attempted to limit or eliminate market risk on their reported trades to OPIS. Vitol and SK also shared the illegally-acquired profits of the scheme amongst themselves. The lawsuit alleges that Vitol and SK’s actions illegally suppressed competition within the gasoline market and forced California consumers to pay more for gasoline.
“Californians are accustomed to casting suspicious eyes at gas pump prices. Whether prices are low or high, try to convince an American that someone isn’t gaming the system. I won’t, because today I’m taking two multinational gas companies to court to prove they manipulated gas prices to illegally enrich themselves at the cost of California consumers,” said Attorney General Xavier Becerra.
Enter the trucking company, Pacific Wine Distributors, Inc. ( Note: Pacific Wine Distributors was recently acquired by wine wholesaler Epic Ventures in February, 2020 and renamed Convoy Beverage Alliance, according to a press release.)
According to the class action lawsuit filed just two days after the CA Attorney General’s lawsuit, the 45-truck fleet alleges that they were forced to pay more at the pump for gasoline after the two gasoline companies “realized that the refinery explosion could serve as an opportunity to artificially inflate the price of gasoline traded on wholesale spot markets in California and to also increase the price of alkylates, whose prices are tied directly to the wholesale price of gasoline, without unwanted scrutiny by other market participants and regulators.”
The complaint alleges that “Vitol and SK Energy agreed with each other to manipulate the spot market price for refined gasoline and gasoline blending components so that they could realize windfall profits on these contracts. Defendants further entered into agreements with each other to share the profits and disguise their illegal conduct.” The trucking firm contends that these agreements violated the Sherman Act, California’s Cartwright Act, and they constituted unlawful, unfair, or fraudulent practices in violation of the UCL.
Pacific Wine Distributors says that they were forced to pay more for gasoline within the State of California as they would have paid in a retail market “untainted by the Defendant’s illegal contact.” The complaint says the trucking company purchased “millions” of dollars worth of gasoline during alleged scheme.
The trucking company is working to have the dozen or so other cases filed against these two gasoline companies since the CA Attorney General filed suit tied to its case.
“Price gouging, whether it’s toilet paper or gasoline, stinks. It’s greed that hurts grandma, the Good Samaritan and everyday Americans,” said Attorney General Xavier Becerra said in his May 4th release. “Every once in a while we get to fight back. That’s what today’s lawsuit is about. No one is above the law”