Mobil, Shell accused of price fixing, hoarding

Daily Marianas Variety: Torres accuses Mobil, Shell of price fixing, hoarding

By Gemma Q. Casas
Variety News Staff

Thursday April 17, 2008

THE former chairman of the House Public Utilities, Transportation and Communications committee is asking Gov. Benigno R. Fitial to order an investigation into the business practices of the two fuel suppliers in the Northern Marianas.

Press Secretary Charles Reyes Jr., in an interview, said the administration will not impose price controls as Mobil and Shell’s price increases were a response to market forces.

“The administration, which has been bearing the enormous financial burden of subsidizing [the Commonwealth Utilities Corp.] operations thanks to P.L. 15-94 and the ever rising costs of fuel, fully sympathizes with Representative Torres’s frustration with record high fuel costs,” Reyes told Variety when asked to comment.

“We suspect that Mobil and Shell are largely responding to market forces and we would be very wary of implementing price controls, which have never worked, historically, and which often result in shortages,” he added. “We don’t like the spike in fuel costs, but we would be very careful about engaging in irresponsible political demagoguery. We understand markets and choose to focus on market economics rather than Huey Long politics.”

Jeff Boyer, Shell retail manager, said: “I haven’t seen [Torres’] letter.”

This reporter was unable to get a comment from Mobil.

Mobil supplies the Commonwealth Utilities Corp. with diesel fuel that runs the agency’s power plants on Saipan, Tinian and Rota.

Torres, who resigned as PUTC chairman after the controversial confirmation of a nominee to the Public Utilities Commission, wrote Fitial on April 16 regarding the business practice of Mobil and Shell.

The price of regular gasoline in the pump in Saipan is now $4.20 a gallon and $4.39 for premium. Rota and Tinian pay higher.

Torres, R-Saipan, wants to know why the two fuel suppliers have increased their prices when the supply they have imported at lesser price has not been totally consumed.

“We have been paying for their gas that has been increased two times for their new supply that arrived on March 15, 2008. Then again, they raised the gas price on March 16, 2008 to $4.14. Then once again they raised their gas price for the third time on April 11, 2008 at $4.209 per gallon for the new supply that hasn’t arrived yet,” Torres told Fitial.

“Mobil and Shell have raised their prices three times. We have been cheated and coerced by these two gas companies. I say this is price fixing and hoarding of their supply,” he added.

He told the governor to help the people of the commonwealth by asking the attorney general to investigate the two companies.

“I am asking for your help on behalf of our people. Tell your AG to immediately investigate this situation and if he cannot do it, fire him and hire an AG that will do it for our people,” the lawmaker said.

But Reyes said it’s not fair to blame the AG.

“We do not think it would be fair to blame the attorney general for the rise in fuel costs. He is not responsible for world markets,” said Reyes.

Fitial tried but failed to convince new fuel suppliers to do business in the Northern Marianas.

The governor is also trying to convince other leaders in Micronesia to buy fuel in bulk so the islands can save on costs.

Reyes said the lack of a safe fuel farm to as storage area prevents the CNMI from getting fuel at cheaper costs.

The CNMI imports fuel from Singapore.

“This is why the governor previously sought alternative fuel suppliers, including a supplier from the Philippines and South Korea. Unfortunately, we could not pursue other suppliers without a fuel farm,” said Reyes.

He said the  problem with the skyrocketing fuel prices is being felt elsewhere.

“This is not a problem encountered by the CNMI alone. Every state in the union is also suffering from rapid energy inflation,” said Reyes.

 “We understand that this is caused by larger macro-economic factors beyond our control, such as the tremendous rise in demand from rapidly emerging markets, including huge countries such as India and China. The conflict in the Middle East has not helped either,” he added.

In 2005, the previous administration looked into Mobil’s business practices but found no irreguralities.

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