Shell Oil vindicated in refinery decision;

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Too little, too late, consumer advocate says

The Bakersfield Californian

Too little, too late.

That’s the response consumer advocate Jamie Court has to the Federal Trade Commission’s decision that Shell Oil Co. did nothing wrong when it decided to close and dismantle its Bakersfield refinery, rather than sell it.

“It’s kind of like getting a pardon after the execution,” said Court, president of the Foundation for Taxpayer and Consumer Protection in Santa Monica.

Shell, bowing to pressure, ultimately sold the Rosedale Highway refinery to Flying J Inc. The Ogden, Utah, company, best known here for its chain of truck stops, assumed operations in March.

Back in November 2003, when Shell confirmed rumors it was shuttering the refinery, company executives said their decision was based on dwindling crude oil supplies in the San Joaquin Valley and the high cost of maintaining the old refinery. The original plant was built in 1932.

Asked if they were interested in selling the refinery, company executives said no, no one would want it anyway.

The Texas oil giant was subsequently criticized for trying to manipulate the market by tightening fuel supplies. The company’s critics included Sens. Barbara Boxer, D-California, and Ron Wyden, D-Oregon, along with Court.

Industry experts said the loss of the refinery would lead to higher prices for consumers.

The plant makes 2 percent of the state’s gasoline supplies and 6 percent of the diesel.

In a statement Wednesday, the FTC said that after conducting an investigation into the matter, the commission found no evidence of wrongdoing on Shell‘s part.

The commission said its ruling would have been the same had the refinery not been sold.

Shell spokesman Stan Mays said, “we’re pleased that the FTC has reached this conclusion.”

But Court said “just because the FTC could not make a case on an antitrust violation does not mean Shell wasn’t closing this facility for a specific reason. The proof’s in the pudding. I believe Shell was clearly intent on artificially reducing (fuel) supply although there was demand for the product.”

In addition to the FTC, state Attorney General Bill Lockyer’s office launched an investigation into Shell‘s decision to close the refinery.

Tom Dresslar, a spokesman for Lockyer, said Thursday that “technically, (the investigation) remains open. We’re working toward closing it.” He added, “We’re pleased with the transition to Flying J so far.”

Jeff Utley, vice president of Flying J’s refining division, Big West Oil, said earlier this week that after making some repairs on the refinery, production is back to normal.

He said Flying J’s plans to expand the refinery’s output are continuing. He expects the permitting process to take about a year.

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