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FTC clears Shell in refinery closing
Agency says company wasn't trying to drive California gas prices higher with Bakersfield shutdown.
May 26, 2005: 5:58 AM EDT

DALLAS - The Federal Trade Commission has concluded Royal Dutch/Shell Group ( RD, SC) wasn't trying to drive up California gasoline prices by closing a refinery in Bakersfield, Calif.

The agency closed a yearlong investigation, stating it could find "no evidence to substantiate" allegations the company was scheming to boost profit margins by squeezing refinery capacity.

After announcing it would close the refinery, Shell Oil, a unit of Royal Dutch, came under pressure from state and federal elected officials who questioned the company's motives. California Attorney General Bill Lockyer helped convinced Shell to keep the refinery open for several additional months to find a buyer. Shell eventually sold the refinery in March to closely held Flying J Inc. , which plans to keep it running.

Tom Dresslar, a spokesman for Mr. Lockyer, said a separate state antitrust " probe will be officially closed in short order."

Shell's initial decision to close the 70,000-barrel-a-day refinery drew loud criticism because it supplies gasoline to California, one of the tightest markets in the U.S. and home to some of the highest pump prices. The Bakersfield refinery produces about 2% of the state's gasoline and 6% of its diesel fuel.

Shell said it would close the refinery because of declining heavy crude-oil production in the area. Shell spokesman Stan Mays said it didn't make sense to continue investing in the facility and the company believed there were better opportunities for its capital elsewhere.

The commission, in a statement on its Web site, said after a "thorough and exhaustive investigation" it found nothing to indicate that Shell was trying to exercise market power.

-By Russell Gold ; The Wall Street Journal; 214-951-7108 Dow Jones Newswires 05-25-05 1929ET Copyright (C) 2005 Dow Jones & Company, Inc. All Rights Reserved.  Top of page


Federal Trade Commission (FTC)
Royal Dutch Petroleum Company
Oil and Gas
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