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Bill calls for investigation of price gouging at refineries

Posted: March 14, 2012 - 12:02am

JUNEAU — A bill banning price gouging in Alaska is getting its first hearing Tuesday afternoon.

Sen. Bill Wielechowski, D-Anchorage, said in a sponsor statement that evidence suggests Alaska’s only two gasoline refiners — Tesoro in Nikiski and Flint Hills in North Pole — routinely mark up their cost of crude oil so they can charge artificially high prices. He said SB28 is a response to those tactics and the resulting high prices felt around the state at the gasoline pump and when heating fuel trucks make deliveries.

“The high price Alaskans are paying for motor fuel and heating oil is caused in large part by this refiner mark-up,” Wielechowski said in his sponsor statement. Alaskan refiners charge “a rate that far exceeds the markup charged by West Coast refiners.”

The bill is co-sponsored by Anchorage Democratic Sens. Johnny Ellis and Hollis French. Under the proposal, the attorney general would be allowed to investigate claims of price gouging by companies refining more than 1 million gallons of fuel per year. A penalty equal to at least 10 times the profit from price gouging could be imposed if a company is found guilty of the practice.

Tesoro responded with a letter to members of the Senate Labor and Commerce Committee in advance of Tuesday’s hearing.

The letter is from an Anchorage law firm that represents the Texas-based company, which employs around 200 people in Alaska. It says past state investigations of price gouging have gone nowhere, and Alaska’s gas market unique because of its small size and higher production costs.

“The Alaska refining industry,” the letter says, “should not now be subjected to the shadow which would be cast by the unsupported, ill-conceived and vaguely worded provisions of SB 28.”

A Flint Hills spokesman declined to comment on the proposal, though he also said the market in Alaska is unique and past investigations yielded no prosecution.

The Alaska attorney general’s office investigated gas prices in 2009 and found no evidence of illegal price-fixing among sellers. Its report cited market conditions unique to Alaska for causing gas prices to stay high while prices in the Lower 48 dropped.

The attorney general’s office performed a similar inquiry in 2002 and drew a similar conclusion.

Five House Democrats have co-sponsored a similar proposal, HB25, but it has yet to receive a committee hearing.

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