Lawsuits: Calif. Gasoline Prices Rose Artificially in 2015 Due to Collusion Among SK Energy, Vitol Post Refinery Explosion [UPDATE]
Last Updated on July 14, 2020
Carpe Carma, LLC v. SK Energy Americas, Inc. et al.
Filed: May 12, 2020 ◆§ 5:20-cv-04138
A lawsuit claims an illegal agreement between SK Energy and Vitol in the wake of a Feb. 2015 refinery fire led Calif. consumers and cos. to pay artificially inflated prices for gasoline.
Case Updates
July 14, 2020 – At Least Two More Suits Claim SK Energy Americas, Vitol Fixed Calif. Gas Prices
At least two more proposed class actions allege SK Energy Americas and Vitol Inc. conspired to artificially raise the spot prices of gasoline throughout California in the wake of the February 2015 ExxonMobil refinery explosion in Torrance.
The antitrust cases, filed May 13 and July 6 in California federal court, allege the companies deployed sham transactions to muddy the actual supply and demand for gasoline in the state, traded amongst themselves with the intent of making artificial spikes in the gasoline spot market, and entered into clandestine arrangements with each other to share profits generated through their disguised arrangement.
Ultimately, the defendants’ collusion restrained trade and led California drivers to pay “well over 50 cents over the national average” for gasoline, the lawsuits claim.
At least two proposed class actions have been filed over a number of allegedly collusive agreements between SK Energy Americas, SK Trading International Co. Ltd, Vitol Inc. and executives at the companies that led to an unlawful increase in gasoline prices paid by businesses and drivers in California in the wake of a catastrophic explosion at a Torrance refinery in February 2015.
Ultimately, proposed class members paid more for gasoline in California than they would have in a retail market “untainted” by the defendants’ misconduct, the complaints allege.
The lawsuits, filed respectively on May 12 and June 29, say the defendants’ scheme began as a result of the disruption in the Torrance, California ExxonMobil refinery’s ability to refine alkylates, which are blended with gasoline to boost octane ratings, caused by the early-morning explosion at the site on February 18, 2015. As one lawsuit describes it, the crippling of a key part of the refinery’s complex, which was forced to run at a reduced capacity for more than a year, created an undersupply of refined gasoline in California, among other consequences. This quickly led to an increase in prices for gasoline contracts on the state’s spot markets and at gas pumps for consumers, the suits claim.
According to one case, the events of February 2015 “presented [the] Defendants with an opportunity” to artificially inflate the prices of both gasoline traded on wholesale spot markets in the state and alkylates, whose prices are tied directly to the wholesale price of gasoline, while avoiding scrutiny from regulators and competitors.
Upon learning of the explosion, the defendants—among whom are an SK Energy senior trader responsible for executive trades on the West Coast and a primary Vitol trader responsible for trading gasoline and gasoline blending components delivered via pipeline within California—immediately began negotiating large contracts to supply gasoline and gasoline blending components for delivery in California, the lawsuits allege. At the same time, the defendants conspired to manipulate and raise the spot market price for gasoline to pull in greater profits on the 10 million-gallon-plus supply and blending contracts while further conspiring to share profits, the cases claim.
The June lawsuit alleges the restraint of trade among the defendants was coordinated by leaders at Vitol and SK Energy, claiming the individuals were friends and former colleagues at Vitol, and continued through late 2016 until one trader left his position at SK Energy.
As a result of the defendants’ alleged conduct, prices for spot market gasoline contracts shot up almost immediately for deliveries to major population centers like San Francisco and Los Angeles, the suits say. The price increase then cascaded down to consumers at the pumps, leading Californians to pay “a premium well over 50 cents over the national average” until long after the effects of the explosion on the state’s gasoline supply had dissipated, according to the lawsuits.
“Thus, beginning in February 2015, California motorists saw unprecedented increases in gasoline prices,” one complaint relays.
On May 4, 2020, California Attorney General Xavier Becerra filed a complaint against the defendants over allegations that the parties “participated in a scheme to drive up and manipulate the spot market price for gasoline” in order to realize windfall profits. The June lawsuit claims the defendants’ conduct only became known to proposed class members upon the filing of Attorney General Becerra’s complaint.
The lawsuits, found below, allege violations of the Sherman Antitrust Act and California’s Cartwright Act, as well as abuses of the state’s Unfair Competition Law.
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