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Marathon Ashland Petroleum Investigated

After previously clearing Big Oil of any wrongdoing in last year's fuel price hike in the Midwest, the Federal Trade Commission (FTC) said Marathon Ashland Petroleum LLC intentionally withheld supplies of gasoline for the Chicago and Milwaukee markets to keep prices high, The Wall Street Journal reported.

It wasn't illegal, and the FTC didn't take action against the refiner. But the incident highlights big energy companies' efforts to take advantage of tight supplies, a tactic that is likely to come under harsh scrutiny on Capitol Hill in the wake of this year's sharply higher gasoline prices.

The FTC didn't name Marathon Ashland in its report. But a company spokeswoman confirmed that Marathon Ashland was the company in question, according to the Journal's report.

In two major investigations reported earlier this year, the FTC looked for illegal collusion among oil companies, and didn't find any. But it found individual actions, such as those by Marathon, which hadn't been previously identified. In an earlier FTC finding, the agency said BP PLC sold some of its Alaskan oil to Asia at a time when refined products were tight in the West. London-based BP has since halted such exports, the report said.

The FTC said in a late March report that actions by an unidentified major Midwest refiner were among the reasons prices soared by 28 cents a gallon in three weeks in June 2000, to $2.13 a gallon for regular unleaded in Chicago and to $2.02 in Milwaukee. The intensity of the price spikes, coming just as Midwest gasoline marketers were rolling out a new federally required lower-emissions gasoline, caused widespread outrage and led Congress to call for the commission's antitrust probe.

In explaining the many reasons for the spikes, the FTC said that "a significant part of the supply reduction" was caused when three unidentified companies produced 23 percent less of the new low-emissions gasoline in 2000 than they produced of the old blend in 1999. But unlike these other companies, Marathon Ashland, a refining and marketing joint venture between Ashland Inc. and the Marathon Oil Co. unit of USX-Marathon Group, substantially increased its production of the new lower-emissions gasoline. Then, despite its excess supplies, the company limited the gasoline it sold to help keep prices high, the FTC claims. The company "thus found itself with considerable market power in the short term," the report said.
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