US court rejects claim producers colluded to drive up gas prices

Washington (Platts)--20Apr2006

A US district court judge has rejected a claim by 18 small Midwestern
cities that five major gas producers used their collective market power to
drive up gas prices to the detriment of residential customers.

The suit, filed in the summer of 2004 in the US District Court for the
District of Columbia, sought an injunction preventing the firms from charging
a wellhead price of more than $5.85/Mcf to the cities' local distribution
subsidiaries.

But Judge Richard Roberts in an order issued Thursday that the cities
failed to make their case. "If the plaintiffs are correct about their
antitrust claims, many consumers...will have been harmed by high natural gas
prices," he wrote.

"However, the dangers and difficulties of judicially mandated price
regulation outweigh those concerns, especially in light of plaintiffs'
unlikely chances for success and their scant proof of irreparable harm."

The cities, most of which are in Kansas, charged that ExxonMobil, BP,
Royal Dutch/Shell Group, ChevronTexaco and ConocoPhillips "engaged in
activities to control and unlawfully increase the price of natural gas in the
United States in restraint of trade or commerce."

According to the suit, the defendants collectively "own or control over
70% of the total proved reserves of natural gas available for purchase of such
gas in the US." The suit claimed the defendants violated the Sherman Act and
the Clayton Act to "unlawfully increase the price of natural gas" and
"substantially lessen competition."

---Mark Davidson, mark_davidson@platts.com

For more information, take a trial to Platts LNG Daily at
http://www.LNGdaily.platts.com.


 

Copyright © 2005 - Platts

Please visit:  www.platts.com

Their coverage of energy matters is extensive!!.