Group: Internal memos show oil companies limited
refineries to drive up prices
Internal Texaco memo, March 1996
The Foundation for Taxpayer and Consumer Rights (FTCR) today exposed internal oil company memos that show how the industry intentionally reduced domestic refining capacity to drive up profits, RAW STORY has learned.
The three internal memos from Mobil, Chevron and Texaco illustrate how the oil juggernauts reduced refining capacity and drove independent refiners out of business in an effort to increase prices. The highly confidential memos reveal a nationwide effort by American Petroleum Institute, the lobbying and research arm of the oil industry, to encourage major refiners to close their refineries in the mid-1990s.
"Large oil companies have for a decade artificially shorted the gasoline market to drive up prices," said FTCR president
"It's now obvious to most Americans that we have a refinery shortage," said petroleum consultant Tim Hamilton, who authored a recent report about oil company price gouging for FTCR. "To point to the environmental laws as the cause simply misses the fact that it was the major oil companies, not the environmental groups, that used the regulatory process to create artificial shortages and limit competition."
The memos from Mobil, Chevron and Texaco show the following.
-- An internal 1996 memorandum from Mobil demonstrates the oil company's successful strategies to keep smaller refiner Powerine from reopening its
-- An internal Chevron memo states; "A senior energy analyst at the recent API convention warned that if the US petroleum industry doesn't reduce its refining capacity it will never see any substantial increase in refinery margins."
-- The Texaco memo disclosed how the industry believed in the mid-1990s that "the most critical factor facing the refining industry on the West Coast is the surplus of refining capacity, and the surplus gasoline production capacity. (The same situation exists for the entire
Abridged and edited from a release.