THE WALL STREET JOURNAL: FTC Clears Shell In Refinery Closure
Posted 27 May 2005
By RUSSELL GOLD
Staff Reporter of THE WALL STREET JOURNAL
The Federal Trade Commission has concluded the Royal Dutch/Shell Group wasn’t trying to drive up California gasoline prices by closing a refinery in Bakersfield, Calif. The agency closed a year-long investigation on Wednesday, stating that it could find “no evidence to substantiate” allegations the company was scheming to boost profit margins by squeezing refinery capacity.
After announcing it would close the refinery, Shell Oil, a unit of Royal Dutch, came under pressure from state and federal elected officials who questioned the company’s motives. California Attorney General Bill Lockyer helped convinced Shell to keep the refinery open for several additional months to find a buyer. Shell eventually sold the refinery in March to closely held Flying J Inc., which plans to keep it running. Tom Dresslar, a spokesman for Mr. Lockyer, said a separate state antitrust “probe will be officially closed in short order.”
Shell’s initial decision to close the 70,000-barrel-a-day refinery drew loud criticism because it supplies gasoline to California, one of the tightest markets in the U.S. and home to some of the highest pump prices. The Bakersfield refinery produces about 2% of the state’s gasoline and 6% of its diesel fuel.
Shell said it would close the refinery because of declining heavy crude-oil production in the area. Shell spokesman Stan Mays said it didn’t make sense to continue investing in the facility and the company believed there were better opportunities for its capital elsewhere.
The commission, in a statement on its Web site, said after a “thorough and exhaustive investigation” it found nothing to indicate that Shell was trying to exercise market power.
Write to Russell Gold at [email protected]
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