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Essex502
04-07-2004, 06:56 AM
Wonder why Califonia Gas Prices are so High? Here's some of the reasons:
Bakersfield refinery shutdown questioned
An investigation is ongoing by state Attorney General’s office
By Doug Abrahms
Desert Sun Washington Bureau
April 7th, 2004
WASHINGTON -- Shell Oil is reaping big profits from a Bakersfield refinery it plans to close Oct. 1, raising questions about whether the company is trying to keep gasoline prices high by reducing California’s already tight refining capacity, a consumer watchdog said.
Company documents obtained by the Foundation for Taxpayer and Consumer Rights show refining margins at Shell’s Bakersfield refinery were three times higher than at its Gulf Coast refineries during late March.
Yet, Shell plans to close the facility, leaving California with only 12 refineries.
A lack of refining capacity is partly to blame for California’s high gasoline prices. Regular gas prices averaged nearly $2.20 a gallon Tuesday in Riverside and San Bernardino counties, according to the American Automobile Association, compared to the national average of $1.77.
"This is a national example of how refiners cheat rather than compete in the restriction of supply by artificial means," said Jamie Court, president of the Santa Monica-based watchdog group. The group said it obtained the documents from company sources.
A Shell spokesman said the documents showing the refinery making substantial money in March are accurate, but only represent a snapshot in time and not a long-term financial picture.
"Two out of the last three years we did not make money in the Bakersfield refinery," Shell spokesman Cameron Smyth said. "That refinery was built over 70 years ago atop its crude source. The crude in the ground is declining."
Shell would consider selling the refinery at a reasonable price, he said.
Shell’s refining margins, the difference between the cost of crude oil and the price of the gasoline created, were $7.19 to $10.19 a barrel during late March for plants in the Gulf Coast and Delaware.
Refining margins for Shell’s three California plants were at least $21.82, and Bakersfield was the most profitable at $23.01, according to the documents obtained by the watchdog group.
"This is a really major fraud on the public to close a refinery that creates 2 percent of the gas in the state," Court said. "This evidence should also spur a national moratorium on all further domestic refinery closures."
The foundation wrote state Attorney General Bill Lockyer asking him to file a lawsuit to prevent Shell from shutting down the Bakersfield refinery.
The attorney general’s office had no immediate comment on the request but has been investigating the Bakersfield refinery’s closing for months to see if it raises any anti-competitive issues, said Lockyer’s spokesman Tom Dresslar.
"Our investigation will continue to be aggressive. It will be thorough," he said. "But there’s no guarantee that this problem can be solved by law enforcement."

Havasu_Dreamin
04-07-2004, 07:16 AM
FOCKERS!:mad: :mad: :mad:

100+Placecraft
04-07-2004, 07:58 AM
Theres more to this subject than what that article spells out. The reason that this particular refinery is shutting down is because the Crude oil that supplies this plant in running out! Crude oil that supply's this facility is pumped from the San Jauquin valley and it is almost dried up, If this refinery is kept in operation then they will need to pipeline the crude there and that is really going to raise the cost of production. So if this plant is kept in service you would probably see those production costs passed on to you, the comsumer. I work for ChevronTexaco and granted I dont work for Shell but there is no way that an Oil company would shut down a refinery that is profitable just to lower the supply in california. We (chevron) cannot keep up with the supply and there are many upgrades going on at both of our Californa Refinery's to make more gasonline. This is also true for the other oil company's as well.
Dont hate me for who I work for, it cost alot to do buisness in California and we also have a cali only formulated gas that does cost more to produce.

Havasu_Dreamin
04-07-2004, 08:08 AM
Originally posted by 100+Placecraft
we also have a cali only formulated gas that does cost more to produce.
That's part of the problem! :mad: Granted, it's imposed uponyou, and us, buy the government.

100+Placecraft
04-07-2004, 08:13 AM
You are right it is passed on to all of us from the government. Be prepared for more costs too. Do you remember that MTBE stuff that was outlawed a few years ago?? Well that chemical was used as an additive to pass emissions regulations, it was later outlawed and the california refinery's were given a grace period on certain emissions testing. Well that time is almost up and we will start to add a new addative and rest assured this cost will not be small for the california refinery's and the cost will probably once again go up a little.

Screaming Pete
04-07-2004, 08:19 AM
Also remember my post a couple of months ago about Shell/Texaco double billing on credit cards between them and Exxon still not paying the fisherman and not doing a total cleanup form the Valdez spill. doesn't leave you a lot of chosses for fuel in calif. :yuk:

Essex502
04-07-2004, 08:40 AM
Originally posted by 100+Placecraft
Theres more to this subject than what that article spells out. The reason that this particular refinery is shutting down is because the Crude oil that supplies this plant in running out! Crude oil that supply's this facility is pumped from the San Jauquin valley and it is almost dried up, If this refinery is kept in operation then they will need to pipeline the crude there and that is really going to raise the cost of production. So if this plant is kept in service you would probably see those production costs passed on to you, the comsumer. I work for ChevronTexaco and granted I dont work for Shell but there is no way that an Oil company would shut down a refinery that is profitable just to lower the supply in california. We (chevron) cannot keep up with the supply and there are many upgrades going on at both of our Californa Refinery's to make more gasonline. This is also true for the other oil company's as well.
Dont hate me for who I work for, it cost alot to do buisness in California and we also have a cali only formulated gas that does cost more to produce.
The industry estimates the there are 35 YEARS MORE OIL AT THE CURRENT PUMPING RATES IN THE VALLEY!
Why is ChevronTexaco drilling more wells and Shell abandoning the refinery?

Essex502
04-07-2004, 08:42 AM
Originally posted by 100+Placecraft
You are right it is passed on to all of us from the government. Be prepared for more costs too. Do you remember that MTBE stuff that was outlawed a few years ago?? Well that chemical was used as an additive to pass emissions regulations, it was later outlawed and the california refinery's were given a grace period on certain emissions testing. Well that time is almost up and we will start to add a new addative and rest assured this cost will not be small for the california refinery's and the cost will probably once again go up a little.
The "new" additive is Ethanol - mandated by the Federal Govenment. It wasn't a surprise to anybody as the cats in Washington are helping the farmer's in the mid west at the expense of CA drivers.

OGShocker
04-07-2004, 08:59 AM
The Shell Bakersfield refinery processes 6% of the oil in California. It is a OLD tech refinery. The oil will be sent (via pipelines) to higher tech refineries in northen and southern California, which are running at less than 85% of capacity right now. The loss of the Bakersfield unit will NOT have a direct impact on the price of fuel.
Why is it people sceam at the oil companies and NOT at the state and fed's for taxing fuel at such a high rate?:mad:
OG (not a cut and paste junkie) Shocker

Essex502
04-07-2004, 09:11 AM
When the shell refineries in CA make 3X higher margins than the Shell oil refineries in the gulf states people will stop screaming.
To carify...the Bakersfield refinery provide 2% of the gasoline produced in CA and 6% of the diesel.

Hustler
04-07-2004, 09:37 AM
The one thing I dont really understand is why the consumer has to pay for upgrading a refinery or for building new pipelines? I dont get it. If I need to add more trucks or buy more tools to keep up with the increased work load or have to move to a bigger facility because the work load demands it, that cost does get past on to my customers, it's part of being a buisness and growing, this is California, it's not going to stop growing and the vehicals on the road will not get any less.

BUSTI
04-07-2004, 10:00 AM
And the conspiracy widens...why is it when the price goes up many people think they are victims of capitalist gone bad? Yet when the price goes down the very same people never say a word?
Lets get the price of gas reduced first by eliminating all the scum sucking politicians to remove all their bullshit taxes they have forced on the oil companies and us!
THERE IN LIES(pun intended) THE BIGGEST CONSPIRACY! ASSHOLE LIBERALS TAKING OUR MONEY AT THE PUMP BY FORCE AND NOBODY SAYS A FRIKKEN WORD. Why doesn't that shit hole watch dog liberal commie group mentioned in the article apply their time and effort reducing the taxes on gas? Because they are a anti- business group that actually loves taxes!

JetBoatRich
04-07-2004, 02:37 PM
fuel prices Suck:mad: paid $2.35 per gallon for diesel last night:yuk:

Essex502
04-08-2004, 06:24 AM
More news:
FTC Will Review Shell Oil's Plan to Close Refinery
Some antitrust experts wonder whether the Bakersfield plant is in the agency's jurisdiction.
By Elizabeth Douglass, Times Staff Writer
The Federal Trade Commission said Wednesday that it was evaluating whether Shell Oil Co.'s plan to close its Bakersfield refinery raised antitrust or unfair competition concerns, but the agency stopped short of launching a formal investigation.
The commission said it would conduct the review in a letter to Sen. Ron Wyden (D-Ore.), who had asked the FTC to investigate the planned closure, arguing that it would limit competition and raise gasoline prices for West Coast consumers.
"The issues that you have raised are very important to this agency and will be seriously considered as the agency evaluates the situation with respect to the Bakersfield refinery and determines what course of action, if any, may be warranted," FTC Chairman Timothy J. Muris said in a letter to Wyden on Tuesday that was made public Wednesday.
Wyden, whose state gets a third of its gasoline from California refineries, said he wasn't satisfied.
"When someone says they are 'seriously considering' something, that's Washington code for nothing's going to happen," he said. At the FTC, Wyden added, "They can find every possible rationale for not doing anything for the consumer."
Chuck Samel, an antitrust attorney with Howrey Simon Arnold & White in Los Angeles, said that "when the FTC says they'll look seriously at an issue, they do." But Samel and other experts questioned whether the agency had the authority to intervene in the Shell case.
"Under the existing antitrust laws, this unilateral decision to shut the plant down wouldn't rise to the level of an antitrust violation, even if there were legitimate concerns about the effects on the market," said antitrust attorney Charles Biggio, a former Justice Department official and a partner at Akin Gump Strauss Hauer & Feld in Washington.
Wyden disagreed, saying the FTC did indeed have jurisdiction because Shell had gained full ownership of the Bakersfield refinery through a divesture required by the commission when it approved the Chevron-Texaco merger in 2001.
An FTC representative didn't return a call for comment Wednesday. A Shell spokesman said the company wouldn't comment because executives hadn't reviewed the FTC letter.
Shell said late last year that it would shutter the refinery in Bakersfield on Oct. 1 because the facility's crude oil supply, which is pumped from nearby oil fields, was on the decline.
State officials and consumer groups say that with gasoline supplies so tight, loss of any refining capacity could push pump prices up. If the Bakersfield facility closes, California's gasoline production would fall by 2%, and its diesel output by 6%, small numbers that loom large in a market suffering from chronic fuel shortages. A variety of refinery outages this year marked the start of a prolonged climb in gasoline prices that has kept the statewide average above $2 a gallon for seven weeks.
"Given the current shortage, or apparent shortage in refinery capacity, it's critical that that refinery stay open," said Michael Shames, executive director of the Utility Consumers Action Network, based in San Diego. California Atty. Gen. Bill Lockyer is investigating Shell's plan; he could act under state antitrust and unfair competition laws. Jamie Court, president of Santa Monica-based Foundation for Taxpayer and Consumer Rights, recently urged the attorney general to redouble his efforts on the case, citing Shell documents that show the Bakersfield refinery is profitable and running with higher profit margins than any of the company's other U.S. refineries.
Court and others accuse the company of wanting to eliminate the Bakersfield facility to strain California's fuel supplies to boost profit at Shell refineries in Los Angeles and in the Bay Area city of Martinez.
Shell spokesman Cameron Smyth has called such allegations "absolutely false."