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Collusion to keep gas prices high

September 9th, 2005 (04:12 pm)
angry
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current mood: angry

Seen at Irregular Times: the Foundation for Taxpayer and Consumer Rights has uncovered memos from Mobil, Chevron, and Texaco proving that they deliberately limited their refinery capacities in order to drive up gasoline prices in the 1990s.

Irregular Times asks:

Let's put two and two together now and ask an obvious question: If those oil companies had not purposefully reduced their refining capacity outside of the Gulf of Mexico, would the impact of the shut down of refineries along the Gulf Coast have had such an devastating economic impact?

Comments

Posted by: Justin du Coeur (jducoeur)
Posted at: September 13th, 2005 07:15 pm (UTC)

Hmm -- those are pretty strong words. Is there evidence of collusion in there? Each of those companies *individually* deciding to limit capacity is legal (AFAIK), but the group of them working *together* to reduce capacity almost certainly isn't. I see internal memos within companies there; the smoking gun would be something demonstrating that they were talking to each other about it. Mind, I think it's obvious that they *were* coordinating their efforts (it would have been foolish otherwise), but that doesn't constitute proof.

The impact from Katrina entirely aside, that's a pretty serious lawsuit waiting to happen if collusion could be proven. (Not that the current government would have even the slightest interest in pursuing it, but that's marvelous political ammunition in and of itself...)

Posted by: Who, me? (metageek)
Posted at: September 13th, 2005 07:29 pm (UTC)
Oops

You're right--I shouldn't have said "collusion". Looking at the Texaco memo, I took "Puget Sound Plant" to be some sort of industry council, but it's actually a Texaco refinery.

Actually, I'm not sure now that they had to be coordinating anything. The Chevron memo talks about an analyst warning the industry that prices would fall if they didn't reduce capacity. If they all knew that they all needed to limit the supply, then you would expect them to do so--but slowly, over years, so that nobody got too far ahead and suffered for it.

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