Shell Oil official clarifies remarks to Senate panel

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The Kansas City Star

A top Shell Oil Co. official has withdrawn remarks before a Senate committee that the company tried to sell a Bakersfield, Calif., refinery before announcing it would close it.

John Hofmeister, president of Shell Oil, told a U.S. Senate committee in November that the company “shopped the refinery around unofficially but did not find buyers. We then decided to close it.”

But in a letter earlier this month to the chairmen of two Senate committees involved in the hearings, he said Shell‘s efforts to sell the refinery began after the announcement that it would be closed. He said he had been mistaken on the sequence of events because he had been working outside the United States and was not overseeing the proposed closing or sale.

The closing of refineries has been an issue because a lack of refinery capacity can contribute to higher prices for gasoline and other refined products. One of California’s senators, Democrat Barbara Boxer, said Hofmeister’s admission was another reason to recall him and the other oil executives who were at the November hearing and make them testify under oath.

Shell announced in 2003 that it would close the Bakersfield refinery and said operating it no longer made economic sense. But the California attorney general and others questioned the closing, saying it could hurt gasoline supplies and prices. Shell then delayed the closing and found a buyer, completing the sale earlier this year. Critics said the sale wouldn’t have occurred without the outside pressure.

Darci Sinclair, a spokeswoman for Shell, said Tuesday that Hofmeister intended to be completely accurate and felt it important to clarify his remarks made at the hearings.

In a further statement, the company said Shell had actually increased its U.S. refinery capacity from 1994 to 2004 and invested substantial sums to do so. The company also said it was able to supply gasoline to its California customers through its existing West Coast supply network.

The Bakersfield refinery was mentioned in June in an article in The Kansas City Starabout the closing of a refinery in Arkansas City, Kan., despite buyers who wanted to purchase it. In the article, some employees at the Bakersfield refinery said they had been told by a company official that the refinery was being closed to keep it out of the hands of competitors. Shell denied that.

Boxer made her proposal to recall the oil executives in a letter dated Dec. 8 to the chairmen of the Senate Commerce Committee. The executives were not under oath for their November testimony.

Executives of other oil companies said at the hearings that their companies had not met with Vice President Dick Cheney when he was working on a national energy policy in 2001. A recent Washington Poststory citing a White House document said executives of those companies did meet with Cheney.

Boxer said Hofmeister’s letter left her “more convinced” that there was a conscious effort on Shell‘s part to purposely reduce the supply of gasoline and increase gasoline prices in California.

“Enough is enough,” Boxer wrote. “We need to get at the truth, and the only way to do that is to bring the oil company executives before the committee under oath.”

Shell said in a statement that it would evaluate any request to call Hofmeister back to testify under oath.

A spokesman for the Senate Commerce Committee said the decision to recall the executives was being left to Sen. Pete Domenici of New Mexico, a Republican, and the Energy Committee that he heads. Both the Energy and Commerce committees participated in the hearings.

A spokeswoman for the Energy Committee did not return a message seeking comment.

Jamie Court, president of the Foundation for Taxpayer and Consumer Rights, said the Senate should further investigate Shell‘s action and why it didn’t initially intend to sell a refinery that in the end sold for more than $100 million.

“If they want to know, there’s something to look at,” he said.

Sen. Barbara Boxer, a California Democrat, is proposing to recall oil executives. The executives were not under oath for their November testimony.
To reach Steve Everly, call (816) 234-4455 or send e-mail to [email protected]

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