Boxer Asks California AG to Look into Alleged Market Manipulation

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U.S. Sen. Barbara Boxer has asked California Attorney General Jerry Brown to investigate whether Shell Oil, in suspending crude deliveries to the Big West refinery in Bakersfield, Calif., was also attempting to manipulate the state’s gasoline market, the Legal Newsline reported last week.

Both Boxer and Brown were prompted by the plant’s United Steelworkers union and the California-based Consumer Watchdog to look into the allegations.

"The Big West Refinery supplies our state with 2 percent of its gasoline and 6 percent of its diesel fuel, and in these tough economic times, Californians can’t afford high gas prices stemming from refinery closures," Boxer wrote in her letter to Brown.

United Steelworkers and Consumer Watchdog allege that Shell’s decision earlier this month to cut off its crude supplies to the Big West refinery was an attempt by Shell to shut down the refinery.

Shell had suspended crude deliveries to the Big West refinery sometime after its parent company, Utah-based Flying J, filed for Chapter 11 bankruptcy last month. The refinery itself has since been shut down for maintenance, although the company has insisted that the 70,000 b/d refinery will continue operations.

Shell has said in media reports that other crude suppliers are free to use the pipeline that ships crude to the refinery and that Flying J owed millions for crude already delivered to the refinery.

Shell is not the only company that had cut off crude supplies to the Big West. OW reported in December (see OW 12/29/2008) that Houston-based oil producer Newfield said it terminated its crude oil sales contract with Big West’s Utah refinery. However, Newfield restored supplies Dec. 24 after the filing for protection from creditors.

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