ExxonMobil denies market manipulation

Company says incident cited by Sen. Ron Wyden of Oregon one in which a small refinery was requesting exemption from environmental requirement

by The Associated Press

Exxon Mobil Corp. has strongly denied charges by Sen. Ron Wyden, D-Ore., that Mobil Corp. once tried to keep an independent California refinery from reopening as part of an attempt to influence the gasoline market.

In a June 15 statement, the oil company said that a 1996 internal Mobil memo concerning the Powerine Oil Co. refinery dealt with “one refiner’s request for an exemption from an environmental requirement to produce cleaner burning fuel.”

“This exemption would have created an unfair playing field,” read the statement issued in response to charges made by Wyden June 14. Irving, Texas-based ExxonMobil said that if an exemption had been granted, a company that had not made necessary investments to produce cleaner burning fuel would be allowed to complete with companies that had.

The memo was one of several internal oil industry documents released by Wyden June 14 that, he maintained, showed market manipulation by oil companies. He alleged that the 1996 Mobil memo showed that major oil companies were not reluctant during the 1990s to try to force smaller independent refiners out of business.

Powerine Oil Co. had ceased operation in 1995, but was trying to start up again a year later, hoping to compete in the production of the cleaner gasoline required by California’s environmental rules.

The gas was selling at a premium and Powerine’s re-entry into the market could cause the price to drop as much as 3 cents a gallon, a Mobil executive warned in the internal e-mail.

“Needless to say, we would all like to see Powerine stay down,” the memo continued. “Full court press is warranted in this case.” The refinery did not reopen.

Responding to Wyden’s allegations, ExxonMobil noted that the California Supreme Court on June 14, in a 7-0 ruling, rejected charges that major oil companies had attempted to drive smaller refiners out of business or manipulated supplies of the special California-blend gasoline.

“The judgment was based on extensive discovery, including a review of over 500,000 documents,” the company said. “The allegations repeated in the senator’s report were considered and rejected by the court.”

“ExxonMobil stands by our ethical business practices and we take strong exception to Sen. Wyden’s allegations of impropriety,” said the statement issued by the company’s headquarters.