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Jewish World Review Jan. 17, 2001 / 22 Teves, 5761
Debra J. Saunders
http://www.jewishworldreview.com -- LAST SUNDAY, the Oregonian reported that BP Amoco "systematically jacked up West Coast oil prices by exporting Alaska crude to Asia for less than it could have sold it to U.S. refiners, according to experts' previously secret reports and federal court records the Oregonian sued to obtain." All bow to the Oregonian. The story illustrates one part of a puzzle that incoming President George W. Bush must solve as he prepares to do battle in America's energy wars. The paper cited a 1995 e-mail exchange between BP trading managers who discussed "shorting the West Coast market" to "leverage up prices" here. It reported that government lawyers found that BP Amoco used a computer model called "the optimizer" to manipulate West Coast prices. It also quoted a government expert who estimated that BP's actions drove up area gasoline prices by 1 to 3 cents a gallon. BP spokeswoman Jennifer Ruys responded that the amounts traded to Asia were "statistically insignificant" ... about 3.3 percent of Alaska's output. That has some credibility given that BP was not exporting to Asia during last summer's price spikes. She argued that the e-mails were not written by company policymakers. Ruys also pointed to a 1999 General Accounting Office audit that found that lifting on the ban on exporting Alaskan crude did not affect gasoline prices.
Still, the documents convinced two of the five Federal Trade Commissioners not to trust BP as the FTC was considering a merger of BP Amoco and Arco. Three FTC members approved the merger in April after BP announced it would stop selling Alaskan crude to Asia if the merger were approved, and agreed to sell Arco's Alaskan holdings to Phillips Petroleum. The two dissenters, Chairman Robert Pitofsky and Commissioner Mozelle W. Thompson, wrote that the FTC should have made BP put it in writing that it would sin no more, that is, not sell Alaskan crude abroad at a loss to boost West Coast prices. The FTC decision raises questions. Why would the FTC allow BP to buy out Arco after it had found evidence that BP stuck it to U.S. consumers? Why not send a message to oil companies that if they get too cute, they may not get the regulatory relief they seek? Or why not say no, because the merger would decrease competition in an industry experiencing price increases that could cause inflation? Said Sen. Ron Wyden, D-Oregon, by phone Friday, "I personally think that the deal was a mistake for West coast consumers, and it was a really grievous error to not include a legal ban" on exports to Asia. Now, of course, it's too late to condition the merger to that provision. The action has moved to Congress and the White House. In 1995, Congress passed a law allowing said exports under the condition that they not cause significant shortages or price increases. In 1996, Clinton approved said exports. Now Wyden, Republican Sen. Gordon Smith and Democratic Congressman Peter DeFazio want either President Clinton or President-elect George W. Bush to ban the exports. Smith told the Oregonian, "Oil found on American property should be used by the American people." DeFazio had unkind words for Clinton for not acting sooner, and is likely to treat President-elect Bush no better. He opposes Bush's call to expand oil drilling in Alaska's Arctic National Wildlife Reserve (ANWR). "It would be an incredibly weak case to open up ANWR if the end result was going to be to export the oil and enhance corporate profits," DeFazio noted. The man has a point. If Bush doesn't agree to a ban, he will have trouble convincing Washington that the need for more domestic crude is so strong that the government should expand Alaskan drilling, but not so strong that companies drilling on public lands shouldn't be allowed to sell Alaskan crude abroad.
In the end Bush could find himself in a corner: Get tough will the oil companies, or forget pumping more Alaskan
01/15/01: Mineta better pray that no attending confirmation senator has ever driven to San Jose during rush hour
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