"This is a market that a handful of companies control," Lockyer told a hometown crowd of about 80 members of the Hayward Rotary Club. "You don't need to break the law to make enormous profits."
His comments came as state lawyers accelerate an effort, announced in late April, to subpoena documents and depose executives of about 10 oil companies that own all 21 oil refineries in California.
Lockyer said he does not expect to find evidence of outright "fraud or collusion" in the closed-session depositions, which could begin before the end of the month. Instead, he wants to look beyond antitrust concerns and examine other methods of potentially unfair business practices.
And he said in an interview that companies that violate the state's broad laws against "unfair competition" could be liable for a $2,500 fine per violation.
It would be up to the courts to determine if a violation is based on retailer-to-retailer sales or, more dramatically, each time a customer pumps gas from a corner station.
"It can get to be a very, very large number of finable sales," Lockyer said.
Some companies and trade associations have balked at Lockyer's investigation, one of several similar probes that have been conducted by federal and state agencies.
"Our view is that there's nothing to hide," said Phil Cochrane, spokesman for BP Carson, which operates a 68-year-old refinery in Los Angeles County. "But it's our approach that we always fully cooperate."
Cochrane said there are a number of reasons why California gas prices are higher than in other states, including the rigid standards that make the state's gas the cleanest in North America. Also, he said, the state simply does not produce enough gasoline to meet its needs.
On some points, Lockyer acknowledged his agreement.
"The problem is, no one wants to permit a new refinery in their neighborhood," Lockyer said. "It's unlikely we're going to get an expansion (of refineries)."
But he said that blaming state-specific taxes on gas prices, as some companies have, does not make sense. The taxes are constant and do not explain why California consumers are repeatedly hammered with periodic price hikes.
Lockyer's talk at downtown Hayward's Masonic Hall was wide-ranging and dealt with topics beyond the scope of the attorney general's office, from which he is being termed out this year.
Lockyer bantered with a crowd of familiar faces who knew him either as a Hayward hills neighbor, former Democratic state legislator or lifelong local whose first elected position was as a San Leandro school board member in 1966.
In the top cop post since 1998, Lockyer considered a run for governor in this election but instead chose to run for state treasurer. He faces a Republican opponent, Claude Parrish, in the November election.
In a brief plug for his candidacy, Lockyer said he would look at directing some state investments toward the "green-wave revolution" of environmental businesses.
"The biggest potential I think is demand reduction," Lockyer said of the state's energy woes, taking time to praise "An Inconvenient Truth," the new Al Gore movie about global warming. "I believe market-based solutions make the most sense increase supply, reduce demand."