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WASHTINGON -- Federal regulators are planning to recommend enforcement action against Marathon Oil Corp., operator of more than 1,600 c-stores in the U.S., on the grounds that the company attempted to manipulate crude oil prices in late 2003, The Associated Press reported.
In a Securities and Exchange Commission (SEC) letter filed Monday, the company said it was notified by the Commodity Futures Trading Commission (CFTC) last month that regulators are prepared to allege that the company "attempted to manipulate the price of West Texas Intermediate crude oil," by offering to sell it at a lower rice than other bids, the report stated.
Marathon will "vigorously" defend itself against government action. The CFTC is not alleging that the company falsely reported crude prices, however.
A CFTC spokesman Dennis Holding, told the AP that the fling "speaks for itself" and declined to comment further.
Several other investigations have been initiated by the CFTC on energy companies accusing them of price manipulation, the report stated.
In February, NRG Energy Inc., a power producer, agreed to pay $2 million as a penalty to settle charges that it falsely reported natural gas trading information to Platts Gas Daily, a trade publication.
In addition, BP stated last year that the CFTC will recommend that civil charges be filed accusing the company's U.S. division with violations in unleaded gasoline futures contracts during October 2002, the report stated.
In other Marathon news, the company is also under fire in Kentucky, where the state attorney general, Greg Stumbo, filed a suit against the company, its Marathon Petroleum Co. division and the Speedway SuperAmerica chain of c-stores, alleging they violated state price gouging laws during the time after Hurricane Katrina, The Associated Press reported.
Stumbo claims that Marathon banked $86 million from consumers and that Speedway SuperAmerica overcharged an additional 3 million in the state.
"We are very disappointed with the actions taken by the state of Kentucky, and Marathon will vigorously defend itself in this enforcement action," Gary R. Heminger, Marathon executive vice president and president of refining, marketing and transportation operations, said in a written statement.
In 2005, Speedway SuperAmerica LLC was informed that its retail locations in Kentucky were under investigation for alleged gasoline price gouging "utilizing a new and extremely vague law," the company stated.
"We do not believe that we violated the law. In fact, we are very proud of our company's response in the wake of hurricanes Katrina and Rita to keep fuel supplies available when 25 percent of the domestic crude oil production and 15 percent of the nation's refinery capacity was shut down by these historic storms. Our product pricing during the time in question was made responsibly, using the same market-based, supply and demand pricing fundamentals we use every day," Heminger added.
Marathon stated the law used to bring the suit against the company is unclear and unconstitutional, and as a result, filed suit in federal court in Frankfurt, Ky., challenging the constitutionality of the law and the interpretation of it.
"Our goal each day is to provide our products at a competitive price at each of our retail locations. We have a 100-year history of supplying the Midwest markets with quality products, and we have been recognized for our strong ethical standards," Heminger concluded. "We will continue to focus on providing quality products to the citizens of Kentucky and the Midwest, and we are confident we will be successful in our defense of this lawsuit."