Tesoro's Dominance of Alaska's Gas Market Questioned

ANCHORAGE, Alaska — Tesoro Corp. agreed to sell one of two fuel storage terminals located at the Port of Anchorage to avoid having a monopoly over Alaska's Railbelt gasoline market, reported KTOO Public Media.

The state of Alaska began investigating Tesoro's dominance of the market following the company's 2015 announcement of plans to buy the Flint Hills tank farm at the port, according to Chief Assistant Attorney General Ed Sniffen. Tesoro owns the state's only gasoline-producing refinery in Kenai, Alaska, in addition to its storage facilities in Anchorage.

The state was reportedly concerned that Tesoro's purchase of more fuel storage capacity at the port could violate antitrust laws by allowing it to shut out competition. "And our conclusion was, it probably would," Sniffen said. "It would allow [Tesoro] to exercise some market power over the sale of gasoline that we were uncomfortable with."

On June 21, the Alaska Department of Law released terms of a consent decree between the state and Tesoro. The agreement requires Tesoro to find a buyer for Terminal 1 within a one-year period, or lease the terminal if it cannot do so. The agreement is subject to the approval of a Superior Court judge and a 60-day public comment period.

On the same day that the consent decree was released, Tesoro announced it completed the Flint Hills purchase. The acquired terminal has a capacity of 580,000 barrels, while the terminal it will sell has a capacity of approximately 220,000 barrels. Despite this disparity, the state's action is important, according to State Sen. Bill Wielechowski (D-Anchorage), who pushed for the investigation.

"We have the refiners right here. Most of the oil comes right from Alaska. We've got the lowest gasoline taxes in the nation. Yet, we often have the highest gasoline prices in the nation," Wielechowski told the news outlet. "So what this does is to say, 'Look we need some competition in the market.' Because that's really the problem."

Wielechowski said Tesoro's sale of Terminal 1 would allow a competitor to bring in fuel from a state in the lower 48 states.

Tesoro did not comment on the sale of Terminal 1, but called its Flint Hills purchase "a great opportunity" for both the company and the state.

"It enhances our ability to efficiently and reliably serve customers in Alaska's interior regions through increased logistics integration from our refinery to our customers," a company spokesperson remarked.