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Regulators to Examine Shell’s Closing of California Refinery

New York Times: Regulators to Examine Shell’s Closing of California Refinery

‘William E. Kovacic, the F.T.C.’s general counsel, said the agency’s investigation would “examine possible antitrust violations” by Shell’

Published: July 8, 2004

WASHINGTON, July 7 (Reuters) – The Federal Trade Commission said Wednesday that it had begun a formal investigation into the Royal Dutch/Shell Group’s plan to shut a California oil refinery, after some lawmakers said that closing it would hurt competition and increase gasoline prices on the West Coast.

William E. Kovacic, the F.T.C.’s general counsel, said the agency’s investigation would “examine possible antitrust violations” by Shell in closing the 70,000-barrel-a-day refinery in Bakersfield.

The agency regards the investigation “as a matter of particular urgency and importance,” Mr. Kovacic said, because Shell plans to close the refinery on Nov. 1.

Mr. Kovacic, who announced the inquiry at a hearing on gasoline prices held by a House Government Reform subcommittee, would not say when the agency planned to complete its investigation.

Senator Ron Wyden, Democrat of Oregon, and other West Coast lawmakers have been asking regulators for several months to examine whether Shell’s action is intended to hurt competition. Retail gasoline prices on the West Coast are always the highest in the nation, because of stricter environmental regulations and a lack of refining capacity.

Shell announced it would close the refinery because local sources of crude oil had declined, making the plant unprofitable. Other companies, though, have expressed an interest in buying the refinery and said there are oil supplies nearby to last another 20 years.

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