Big Oil Cos. Tangled in Pricing Concerns

Press enter to search
Close search
Open Menu

Big Oil Cos. Tangled in Pricing Concerns

CHICAGO -- Five major oil companies -- ExxonMobil, Marathon Oil Corp., Citgo Petroleum Corp., and the U.S. units of Royal Dutch Shell and BP -- will face a lawsuit that claims the companies conspired to drive up the price of fuel, U.S. District Judge Amy St. Eve ruled earlier this week.

The complaint accuses the companies of intentionally limiting the available gasoline supply, driving up prices and boosting profits, a report in The Los Angeles Times stated.

"Facts consistent with these allegations could establish that defendants unjustly enriched themselves or acted deceptively or unfairly," said St. Eve, while rejecting the companies' request to dismiss the lawsuit. Company representatives declined to comment to the Times.

The suit seeks class-action status on behalf of all affected customers in Illinois. The ruling will allow Chicago-area plaintiffs, Michael and Rebecca Siegel, who filed the complaint under the state's consumer fraud statute, to request evidence and testimony from the companies to prove their claims, the report stated.

As the ruling came in, gas prices in another part of the country were reaching new heights. Reports on local television stations in San Francisco reveal that gas prices rose to $4 per gallon in some areas.

"I guess with the price of a barrel of oil going up, the price of a gas goes up as well, you know?" Tom Short, a California resident, told local television station CBS5. Short was pumping gas at a Shell station in San Francisco at the time, where premium gasoline went for $4.07 a gallon, and regular gas sold at $3.87. Across the street, gasoline went for 50 cents less, according to the report. "Oh well, I didn't notice that," Short said. "I guess that's why I'm the only one here."

However, industry experts give another reason for the elevated prices. "Most of what's going on is an issue at the refining level in California," said Severein Borenstein of the University of California Energy Institute.

In the past several weeks, California's Bay-area pump prices rose more than 50 cents per gallon, the report stated.

"The problem is, that this is the time of year when the refineries switch over to making summer blend gasoline. First of all that means they often have to shut down for a while to do the changeover and disrupts the supply," Borenstein added. "The yield isn't as good, so we just get into a tighter market."

Another issue affecting consumer perception is the hot fuel debate, which is being tackled by a group of petroleum marketers calling themselves PUMP -- Partnership for Uniform Marketing Practices.

The hot fuel debate is centered around the theory that when temperatures rise, gasoline expands and consumers get less fuel for each gallon pumped, as dispensers do not allow for temperature changes in fuel.

To address the issue, PUMP was created to "fight recent allegations that consumers are receiving less than they pay for as the result of retailers selling gasoline at temperatures higher than standard 60-degree reference temperature," the group stated.

PUMP member companies include the American Trucking Association, petroleum marketers, convenience store associations and NATSO, an association representing North America's truckstop operators.

No accurate data exists that confirms consumers are being negatively impacted by the current fueling system, and any changes from the reference temperature are balanced out in seasonal averages, according to PUMP.

The debate began in December when Public Citizen, a consumer group, publicized a complaint filed by truck drivers and motorists in seven states against 17 oil companies and fuel retailers.