You are here
PLEASANTON, Calif. -- With yet another California refinery set to shut down, a state legislator is demanding that oil companies prove they are not intentionally driving gas prices higher by collectively clamping down on supplies, reported the Pleasanton, Calif.-based East Bay Business Times.
Skeptics say the state Senate committee probe will have no real impact, other than putting oil company executives in the hot seat for a few months.
But Sen. Joseph Dunn said he might introduce legislation that would broaden antitrust laws or ban oligopolies in certain markets if the investigation finds that the companies used their collective dominance to drain Californians' wallets.
The Garden Grove Democrat is polishing the written requests that a panel he has assembled will send out to the seven oil-and-gas companies that he says control 95 percent of the state's market.
The select committee on gasoline and diesel pricing is primarily interested in documents -- some internal -- from analysts and executives that may suggest a link between refinery production levels and prices at the pump.
Some memos made public during the Senate's high-profile investigation of the energy industry -- led by Dunn -- found that companies acted on the advice of experts who sat on "market surveillance committees." Dunn said he does not know what their counterparts in the oil industry are called, but he insists they exist.
Lower supplies and higher demand are now a reality, and elected officials are increasingly skeptical of any moves by oil companies that could further squeeze the California market. For instance, officials and consumer advocates are questioning Shell Oil Co.'s plans to close a Bakersfield refinery at a time when statewide surplus levels are slim. That refinery produces 2 percent of California's gasoline.
The investigation could have a real impact if the committee discovers collusion among the majors, although both Dunn and industry experts agree there has been little evidence of that.
Shell executives have said they are closing the Bakersfield facility because the heavy San Joaquin Valley crude it processes is dwindling, and that running refineries in both Bakersfield and in Martinez -- which takes the same crude -- would be unprofitable.
Dunn's pushing of the investigation has consumer advocates eager for answers. The Democrat led the Senate committee that probed the energy market from 2001 until last summer. He does not take full credit for all of the unearthing of corporate malfeasance, but Dunn said his investigation led to the documents that contained the now-infamous trading tactics nicknamed "Death Star" and "Fat Boy."
Dunn said he plans to use the same tools to extract information from the oil companies, including subpoenas for documents and requests for in-person testimony. If executives resist the committee's requests, he said they could be held in contempt, with penalties of up to $1 million per day.