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Nation: BP accused of tightening supplies to spike gas prices on West Coast

The Associated Press PORTLAND, Ore. (January 6, 2001 6:49 p.m. EST http://www.nandotimes.com) - BP Amoco bumped up West Coast oil prices by exporting Alaskan crude to Asia for less than it could have sold it to U.S. refiners, according to experts' reports and court records obtained by The Oregonian.

Gas prices on the West Coast are among the highest in the nation, with Oregon motorists averaging $1.61 for regular unleaded -- about 20 cents above the national average.

The documents, which the newspaper filed suit to obtain, were part of a Federal Trade Commission analysis of BP's proposed $26.8 million buyout last year of Atlantic Richfield Co.

In a 1995 e-mail exchange described by the newspaper, BP managers Robert Aicher and Linda Adamany discussed "shorting the West Coast market" to achieve "West Coast price uplift scenarios."

The e-mail describes shipping ANS to FE -- Alaska North Slope crude to the Far East - to "leverage up" prices on the West Coast.

"When they say 'leverage up,' what does that mean?" said economist R. Preston McAfee, one of two experts hired by the FTC. "It means, 'We're going to jack up the West Coast price by taking some of our production and selling it at a lower price elsewhere."

McAfee and veteran engineer Steanson B. Parks, president of a consulting firm in Dallas, both concluded for the FTC that BP had tightened oil supplies to raise the price of millions of barrels of crude oil shipped to refineries in California and Washington state since 1995.

The records were kept under seal in U.S. District Court in San Francisco after the FTC and the states of California, Oregon and Washington sought an injunction to halt the merger last year.

Regulators alleged the merger would eliminate Atlantic Richfield as one of BP's chief competitors in the exploration and production of Alaska crude oil; together they would own 72 percent of the 800-mile Trans-Alaska Pipeline.

BP averted trial by agreeing to sell off Atlantic Richfield's Alaskan holdings to Phillips Petroleum for $7 billion, and the majority of the five-member trade commission approved the merger in April.

BP officials dispute the FTC experts' conclusions, deny the company engaged in anticompetitive pricing and say the commission's approval of the merger speaks for itself.

"What we did in terms of sales to the Far East was well within the bounds of the law," said Jennifer Ruys, a BP spokeswoman in New York. She said the company has halted its shipments to the Far East because it needs the crude for newly acquired refineries.

It's not clear how much BP's pricing strategy might have cost West Coast motorists. McAfee said he is bound by a court order that forbids the disclosure of confidential information and could not reveal his calculation of how much BP raised prices to the West Coast, which consumes 2.6 million barrels of crude a day.

It was "more like 50 cents" a barrel than several dollars, he said, when crude prices ranged from about $12 a barrel to more than $30. That translates to 1 to 3 cents a gallon at the gas pump, McAfee said.

Sen. Ron Wyden, D-Ore., a member of the Senate Energy Committee and an opponent of the merger, said the newly disclosed records provide further evidence that Northwest motorists are getting a rough ride at the pump.

Oil companies have blamed the Northwest's higher prices on OPEC cutbacks, refinery fires, taxes and pipeline disruptions.

http://www.nandotimes.com/nation/story/0,1038,500296946-500473292-503215399-0,00.html

-- Martin Thompson (mthom1927@aol.com), January 06, 2001