Oil sent out of Midwest on purpose, study says

October 19, 2000

BY ROBERT C. HERGUTH TRANSPORTATION REPORTER

The oil industry intentionally sent reserves out of the Midwest and exported other supplies to foreign countries earlier this year to artificially create shortages, a new study asserts.

Those actions--and not new federal environmental requirements as the industry has consistently claimed--caused gasoline pump prices to soar beyond $2 a gallon in Chicago and Milwaukee, according to a report Wednesday by the Foundation for Taxpayer and Consumer Rights.

"These inventories should have been built up in anticipation of the spring and summer drive season," said Jamie Court, executive director of the nonprofit California group. "But instead, they were transferred out of the area, and even to places such as the Southwest--Texas--where more than ample supplies existed.

"The effect was to drive prices up, due to the creation of an artificial shortage," he added.

Dave Sykuta, executive director of the Illinois Petroleum Council, the trade group representing major Illinois refiners such as Shell, Mobil and BP Amoco, had not read the study but was aware of the findings. He called them flawed.

"Their conclusions are completely at odds with what the [U.S.] Department of Energy has come up with and the Federal Trade Commission has come up with," he said.

The study recommends, among other things, creating a uniform standard of gasoline so the industry can't take advantage of a given region, beefing up antitrust laws and imposing limits on the flow of exports.

http://www.suntimes.com/output/news/gas19.html

-- Martin Thompson (mthom1927@aol.com), October 19, 2000