If you live in California and purchased gasoline between February 20, 2015 and November 10, 2015 in San Diego or Los Angeles Counties, (plus eight other counties)*, then you are probably eligible for a refund thanks to a legal action by the California Department of Justice. Some of you may have received a postcard notification.
Submit a claim online here at: https://calg.calgaslitigation.com/
Now the bad news. We are going to give you an overview of the criminal activity that occurred, how much money you may receive, and why the fines and penalties, totaling $50 million, are at best a queasy compromise, and at worst, a steaming pile of legal hokum and justice denied.
What the case is about: (in lay terms)
Three gasoline trading companies (Vitol Inc, SK Energy Americas, and SK Trading International Co) conspired to screw motorists straight into the ground after a California gasoline refinery explosion in February 15 of 2015 created a brief shortage of gasoline, and a dazzling and glamorous opportunity to game the market at your expense.
In selected counties, gas prices reached all-time record highs of $6.44 a gallon because the three companies listed above conspired to “manipulate, raise, fix, and tamper” with California’s gas prices on the “spot market.” By way of explanation, the Spot Market is where gasoline is sold at the wholesale level for “cash on the spot.”
The term “cash on the spot” comes from the oil industry. The gasoline spot price is literally paid as “cash on the barrel head” which is another oil industry expression from the days when oil and gasoline were sold in 42 gallon wood barrels.
How Vitol, SK Energy, and SK Trading manipulated the market
The three trading companies executed a series of unlawful “wash trades” and “accommodation trades.”
A wash trade occurs when the same contracts for spot market gasoline are bought and sold frequently in a back and forth manner that creates an illusion of increased market activity. A frenzy of wash trades can create the perception of high demand, shortages, and increasing prices. As a result of these criminal activities, Vitol, SK Energy, and SK Trading, made a killing … and kept on killing.
To further their illegal activities, Vitol, SK Energy, and SK Trading also engaged in “accommodation trades,”** which are a form of outright fraud where gasoline was sold on the spot market for an amount that is lower than the published price (See “Opis” below). In other words, they lied about the price they paid and created fake trades to panic the market.
False price reports
The oil industry gets its pricing information from OPIS, the Oil Price Information Service, which “… helps energy traders maintain a competitive edge during periods of oil and gas market volatility.”
The illegal wash and accommodation trades executed by Vitol, SK Energy, and SK Trading, fooled OPIS, which reported monstrous price hikes. Many of the fake trades used others brokers to hide the fact that Vitol, SK Energy, and SK Trading weren’t really buying or selling any gasoline at all. They were selling the same contract repeatedly, creating a flurry of false trades that looked real.
Sometimes, the three criminal entities lost money early in the day, but they always gained it back with profits before the close of business. A partial description of these simple high-frequency “wash,” repeat, and “accommodate” and trades can be found in the unredacted complaint.
The bottom line:
Together, Vitol and the SK energy and trading companies participated in a criminal conspiracy to siphon your hard earned money into their bottomless corporate blood funnels. The settlement has done little to curb their greed, or to stop market manipulation in the oil industry, but it will provide you with a refund if you live in a qualifying county and apply for it at the link above.
Click here to see how much money you may receive. from the Gasoline Settlement.
File a claim online here at: https://calg.calgaslitigation.com/
Click here for a copy of the Direct mailed Claim Form, and why we think it is substandard.
* Qualifying counties are Los Angeles, San Diego, Orange, Riverside, San Bernardino, Kern, Ventura, Santa Barbara, San Luis Obispo, and/or Imperial counties in California.
** Accommodation Trades are also used by criminal enterprises as a way of laundering money.