Kentucky AG Sues Marathon Petroleum for Anti-Competitive Gas Pricing

LOUISVILLE, Ky. — Marathon Petroleum Corp. has a stranglehold on the wholesale gas market that is "most pronounced" in Louisville, Ky., and Covington, Ky., but the monopoly "harms everyone in Kentucky," according to Jack Conway, the state's attorney general who filed suit against the parent of Speedway LLC in federal court on Tuesday.

According to a report by WDRB, cleaner-burning reformulated gas (RFG) is required in Louisville and Covington during the summer months to reduce air emissions. Marathon Petroleum owns the only oil refinery in Kentucky and another in nearby Illinois, and supplies about 95 percent of the RFG in Louisville and northern Kentucky, according to the lawsuit.

Conway said his analysis shows Louisville wholesale gas prices are approximately 25 cents per gallon higher than in St. Louis, the closest comparable market where RFG is required. Prices at the pump, excluding taxes, were 17.3 cents per gallon higher on average in Louisville compared to St. Louis in the summer of 2014, he cited in the suit.

In a news conference to discuss the lawsuit, Conway said Marathon Petroleum earned an extra $40 million from Louisville wholesale and retail sales last summer due to its anti-competitive pricing.

Kentucky's attorney general also stated that his investigation revealed some independent gas station retailers are required to buy 100 percent of their fuel from Marathon Petroleum, which he called unlawful, and Speedway's parent entered into "exchange agreements" with other refiners to keep their products out of the Kentucky market, the news outlet reported.

"Marathon Petroleum disputes the allegations outlined by Attorney General Jack Conway at a news conference … and will defend the judicial action vigorously in court," the company wrote in a released statement.

Findlay, Ohio-based Marathon Petroleum Corp. is the nation's fourth-largest refiner. Its Enon, Ohio-based Speedway division owns and operates the nation's second-largest convenience store chain with approximately 2,750 convenience stores in 22 states.