Refiner group pans US Senate oil industry antitrust bill
Washington (Platts)--10Apr2006
The National Petrochemical and Refiners Association Monday panned
legislation introduced by members of the US Senate Judiciary Committee last
week to strengthen oil and gas antitrust laws, define and prohibit energy
price gouging and allow OPEC members to be sued in US courts, saying the bill
is based on "flawed assumptions."
NPRA President Bob Slaughter, in a statement, said the organiztion
disagrees with the underlying premise behind the bill -- that concentration in
the oil industry has had an adverse impact on consumer protection.
"Today's refining industry is highly competitive," Slaughter said. "Data
do not support the conclusion that acquisitions have increased prices. In
fact, we believe companies have become more efficient through mergers and
acquisitions plus organic growth." He further contended that mergers in the
reefing industry have "actively maintained and even increased refining
capacity. Without such consolidation, the individual refineries involved might
not have been economically viable."
NPRA also is concerned about other aspects of the bill, Slaughter said,
including a provision that would punish companies for refusing sell, diverting
supplies or exporting supplies with the intention of raising prices. He said
that the measure "may well be an illegal trade barrier."
The provision's impact on export markets is unknown. "In a
well-functioning marketplace, sellers choose among potential buyers based upon
price," Slaughter said. "The proposal seems contrary to this essential market
behavior and creates de facto price controls" Slaughter pointed out that the
energy price and allocation controls of the 1970s resulted in supply shortages
in the form of long gas lines. "Studies have shown that, although intended to
reduce costs, controls actually resulted in increased costs and greater
inconvenience for consumers," he said.
The bill's requirement that a state-federal task force be set up to
investigate information sharing between oil companies to determine if that
practice has encouraged anticompetitive pricing "appears flawed as well,"
Slaughter said. "First, the Committee has laid no predicate for the argument
that information is currently shared in impermissible ways. Two dozen analyses
seem to contradict the assumption that any data are improperly shared," he
said.
Slaughter also said a provision in the bill to waive OPEC's sovereign
immunity, applying extraterritorial jurisdiction, and waiving the act of state
doctrine was "likely to exacerbate a political situation that is already a
cause for concern."
The result, he said, could be "retaliation against US commercial interests
worldwide and further limitations on international free trade. For the
foreseeable future, American industry will need to engage OPEC in ongoing
business relations."
--Cathy Landry, cathy_landry@platts.com
For more information, take a trial to Platts Oilgram News at
http://oilgramnews.platts.com.
Copyright © 2005 - Platts
Please visit: www.platts.com
Their coverage of energy matters is extensive!!.