Evidence Shows Shell To Demolish Profitable Refinery, Drive Up Gas Prices;

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Consumer Group Seeks Intervention Of Bush, Kerry & CA Attorney General

Santa Monica, CA — The Foundation for Taxpayer and Consumer Rights today released internal Shell documents showing the oil refiner is set to close and demolish its Bakersfield refinery despite the fact the site had the biggest refinery margins, or profits per gallon, of any Shell refinery in the nation as of yesterday.

Shell had claimed it was not economically viable to keep the refinery open and has refused to put it up for sale. Bakersfield supplies 2% of the state’s gasoline and only 13 refineries feed California’s tight gasoline supply (down from 37 in 1983).

An April 5th internal Shell document released today by FTCR shows that Bakersfield’s refining margin at $23.01 per barrel, or about 55 cents profit per gallon, topped all of Shell‘s refineries in the nation. That means, for example, that margins are 36 cents per gallon higher in Bakersfield than in Port Arthur, Texas. The internal document comments under the category of refinery margins “Wow.”

“Only an oil company that wants to short the market and artificially drive up the price of gasoline would demolish a highly profitable refinery rather than sell it,” said Jamie Court, president of FTCR and author of the book Corporateering (Tarcher/Putnam). ” Shell has deceived the public about Bakersfield and must be forced to keep this refinery open or sell it to a competitor. This evidence should also spur a national moratorium on all further domestic refinery closures.”

In a letter sent today, FTCR called upon California Attorney General Bill Lockyer to file suit under the state’s Unfair Business Competition Law to force Shell either to sell the refinery or to keep it running. The consumer group said it could seek such legal relief itself should the Attorney General not act.
Click here to read the letter to the AG.

Click here to read the internal Shell documents.

FTCR also wrote President Bush and US Senator John Kerry to ask both candidates to support a national moratorium on refinery closures throughout the United States, stating that the recent run up at the pump “has little to do with OPEC but is a result of the deliberate restriction of supply by the highly consolidated domestic refining industry.”
Click here to read the letter to Bush & Kerry.

Among the documents released today by the consumer group is an end-of-2003 memo from Shell manager Jeff Krafve to fellow refinery employees that describes Bakersfield’s refining operation this way: “[W]e turned in excellent operational performance this year. We are the most reliable US Shell refinery in 2003, and achieved world-class performance two years in row now. We have made quantum step improvements in our environmental compliance, finishing well under target again for the second straight year. We have reduced the expense we control 15+% year over year, and have been one of the few Shell U.S. refineries to turn a profit’.We’ve done this with the lowest personnel index in Shell refining in the country, making us comparatively the most productive and effective workforce in the system.”

FTCR’s letters to Lockyer, Bush, and Kerry also reveal, “Refinery workers in Bakersfield told FTCR that Aamir Farid, General Manager of Shell‘s refinery, stated to hundreds of employees at an employee meeting that the company would never sell the refinery because it did not want the competition. This suggests the real motivation for the company to close the refinery is to insure its production does not stay on line and to further decrease competition for the company’s remaining two refineries in California.”

In addition, FTCR uncovered a timetable showing decommissioning and demolition are set to begin immediately after the refinery’s shut down date. Court and petroleum consultant Tim Hamilton — both members of the Attorney General’s Gasoline Pricing Task Force — wrote to Lockyer, “As the bulldozers are apparently on their way to Bakersfield, time is of the essence.”

The letter to Lockyer also states: “This market obviously functions like no other. If there were a computer shortage, would any computer maker close computer factories? At last, we believe there is an opportunity for you to act under the state’s Unfair Business Competition Law to stop Shell‘s plan to demolish its refinery and to prevent gasoline prices from spiking once again.”

The letter to Bush and Kerry ends: “Together you have an opportunity to stop Shell from closing this refinery and to maintain the nation’s refining capacity by calling for a moratorium on all refinery closures in the United States. It’s the right thing to do not only for Americans’ bank accounts, but also for our national security.”

Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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