Research Report Reveals Magnitude
of Refiner Price Gouging in Alaska
Sen. Wielechowski Estimates
Refiner Price Gouging has Cost Alaskans over $189,000,000, Renews Call for Passage of Anti-Price Gouging
December 30, 2009
Anchorage, Alaska - Senator Bill Wielechowski (D-Anchorage) today
released a research report prepared by the non-partisan Legislative
Research Services Division that conclusively shows that price
gouging by Alaskan refiners has continued unabated, and the average
refiner margin in Alaska in August 2009 is twice the national
"During the last legislative session we were assured by
a Tesoro representative that Alaskan gasoline prices were merely
lagging behind those of the lower forty eight, and that they
would soon come down," said Wielechowski. "These charts
show that the refiners have continued to jack up the price of
gas, even when the price of crude oil has gone down."
The refiner margin is very roughly the profit earnings, plus
some costs, for a refiner. Tesoro and Flint Hills Refiners provide
virtually all the refined gasoline for Alaska, with Tesoro dominating
the gasoline refining, with over 80% of the market. According
to the American Automobile Association, Alaska still has the
highest gasoline prices in the nation today (http://www.fuelgaugereport.com/sbsavg.html).
The Research Report shows refiner margin trends in Alaska, Washington
and the United States since 2004. From January 2004 through
July 2008, the refinery margins in Alaska have roughly tracked
the refiner margins in Washington and the United States, with
occasional fluctuations. However, when the price of oil spiked
in the summer of 2008, Alaskan refiner margins exploded to $1.45
per gallon by October 2008, while the Washington and US average
refiner margin peaked at 60 and 63 cents, respectively, in September
In November 2008, the Washington and US average refiner margins
hovered at around 10 cents per gallon, while Alaska's refiner
margin remained over 10 times higher, at $1.17 per gallon. As
the Alaska legislative session progressed, and price gouging
bills continued to be debated over Tesoro's and Flint Hills strong
objections, the refiner margin difference narrowed. After the
session ended in April, Alaska refiner margins dropped for two
more months, hitting a low of 78 cents per gallon in June 2009,
while the Washington refiner margin was 54 cents per gallon,
and the US average refiner margin was 46 cents.
However, in July 2009, the Alaska refiner margin spiked again
to $1.02 per gallon, while the Washington and US refiner margins
both dropped, to 48 cents and 35 cents, respectively.
"The evidence is plain and speaks for itself. Alaskans
continue to be gouged by Tesoro and Flint Hills refineries,"
said Sen. Wielechowski.
From January 2004 through June 2008, the Alaska refiner margin
has averaged about 59 cents per gallon, while the Washington
refiner margin has averaged about 52 cents per gallon, and the
US average has been about 47 cents per gallon. The Alaskan refiner
margin has historically been about 7 cents higher than the Washington
average, and 12 cents higher than the US average. These higher
costs account for the slightly higher cost of doing business
in Alaska. However, from July 2008 through August 2009 (the last
date for which data are available), the Alaska refiner margin
has averaged $1.03 per gallon, while the Washington and US refiner
margins have averaged 42 cents and 35 cents. Taking the historical
averages, Sen. Wielechowski estimates that Alaskans have been
overcharged an average of 54 cents per gallon (compared to Washington
refiners: $1.03 AK refiner margin -.42 Washington refiner margin
= .61 - .07 (historically higher AK refiner margin) = 54 cents
overcharge. The US average difference is 56 cents).
Wielechowski noted that Alaskans use approximately 25 million
gallons of gasoline per month, on average. Every penny in additional
costs added by refiners costs Alaskans about $250,000. 54 cents
multiplied by 250,000 equals a loss of $13,500,000 per month.
This means that Alaskans have paid an additional $189,000,000
for gasoline over what they have historically paid (compared
to Washington refiner margins). Compared to US refiner margins,
the overcharge is higher.
Senator Wielechowski noted that the price gouging continues today,
adding tens of millions of dollars in overcharges, but the data
are not yet ready to report.
"Price gouging is costing Alaskans hundreds of millions
of dollars. This is a hidden tax on consumers, and it is hurting
our families and our businesses." Sen. Wielechowski said.
The Senator urged the swift passage swift passage Senate Bill
54, which would outlaw price gouging on gasoline and other fuels
the Research Report
Download 2008 Gasoline Consumption by State
Tesoro Rep. Quote
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