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California attorney general sues to prevent Valero acquisition

MARTINEZ — California Attorney General Xavier Becerra is suing to prevent an oil company’s attempt to purchase a petroleum terminal in Martinez, a move that he said could drive up gas prices across the state.
Becerra on Thursday announced in San Francisco that he will file the action against Valero Energy Corp., which is attempting to buy the petroleum terminal from Plains All American Pipeline.
Becerra said the acquisition by Valero would mean the end to independent petroleum terminals in Northern California because refineries would own them all.
“If the final independent petroleum terminal is bought, suppliers can manipulate the market to dictate prices,” Becerra said, adding that the restricted competition could drive up prices in California, where they are already high.
Valero is trying to buy petroleum terminals in both Martinez and Richmond, but the motion for preliminary injunction that Becerra intends to block the purchase would only apply to the terminal in Martinez, according to Eleanor Blume, special assistant to the attorney general. Blume said the Martinez terminal is larger and more critical to California’s gas supply.
“We’re not trying to stop companies from doing business, we’re trying to protect consumers,” Becerra said.
According to Severin Borenstein, a professor of business administration and public policy at UC Berkeley’s Haas School of Business, California gas prices are high partly because of gas taxes and the cost of creating cleaner-burning fuel than is required in other states, but after accounting for those costs, there is a big differential between average California prices and other states that is hard to explain, particularly in recent years. He spoke at the press conference in San Francisco but is not involved directly with the action filed by the attorney general.
Gas prices tend to spike after problems like a refinery fire, such as the one at the Chevron refinery in Richmond in 2012, but whereas gas prices eventually receded after the spike following that one, they have remained high following a refinery fire at ExxonMobil in Torrance in 2015. Limiting competition could keep prices high, Borenstein said.
Representatives from Valero, which also operates a refinery in nearby Benicia, did not immediately respond to requests for comment.

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