Bakersfield.com: Federal Trade
Commission to evaluate decision to close Shell refinery
By ERIN WALDNER, Californian staff writer
e-mail: ewaldner@bakersfield.com
Posted: Wednesday April 7th, 2004, 2:03 PM
Last Updated: Wednesday April 7th, 2004, 2:17 PM
The Federal Trade Commission has confirmed it
is evaluating Shell’s decision to close its Bakersfield refinery.
U.S. Sen. Ron Wyden of Oregon has
twice asked the commission to re-examine mergers in the gasoline industry in
order to investigate Shell’s plans for the plant.
Timothy Muris, chairman of the FTC, wrote a letter to Wyden on Tuesday: "The
issues that you have raised are very important to this agency and will be
seriously considered as the agency evaluates the situation with respect to the
Bakersfield refinery and determines what course of action, if any, may be
warranted."
Muris did not say whether the commission has launched an official investigation
into the matter. A spokesman for the commission, when contacted today, declined
further comment.
As for Wyden’s office, "The senator considers the letter to be lackluster," said
Carol Guthrie, a spokeswoman for the senator. Saying you’re concerned about a
situation and actually taking action are two different things, Guthrie said.
Meanwhile, Shell released a statement on Tuesday that it "welcomes discussions
with potential buyers of the Bakersfield Refinery."
"Since so many people have questioned if the refinery is for sale, I want to
make it clear that it is, and to state unequivocally that we are willing to sit
down with any credible buyers to discuss such a deal," Lynn Elsenhans, chief
executive officer of Shell Oil Products U.S., said in the statement. "We still
believe, however, that once potential buyers take a close look at the facility
and its available crude supply, that they will reach the same conclusion that we
have. That this refinery is not economically viable going forward for a number
of reasons, including the cost and availability of the crude needed to run the
facility."
When Shell announced in November that it was closing and dismantling the
Rosedale Highway refinery, reporters asked if the company would consider selling
the plant instead. Shell executive Aamir Farid said any new owner would face the
same problem as Shell - declining local crude supplies.
State oil officials say their projections show the valley has at least 20 to 25
years of remaining heavy crude supplies.
Also this week, the Santa Monica-based Foundation for Taxpayer and Consumer
Rights publicly called on State Attorney General Bill Lockyer to file suit under
the state’s Unfair Business Competition Law to force Shell to sell the refinery
or keep it operational. The group said Tuesday it had obtained internal company
documents that proved the refinery was in the black in 2003.
In the statement from Shell, Elsenhans said, "We are disappointed that these
documents were publicly released but ... they do show that the Bakersfield
Refinery lost money in 2001 and 2002, and that the profit that we project for
the refinery in 2004 does not justify maintaining our investment in the
facility."
The attorney general’s office confirmed in February that is was looking into
Shell’s plans to close the refinery.
"The Attorney General is going to do everything in his power to try and protect
the drivers of this state and the Bakersfield area from the financial hardships
they could well suffer if this refinery closes," Tom Dresslar, a spokesman for
the attorney general, said today.
The refinery produces 2 percent of the state’s gasoline and 7 percent of the
diesel. Industry experts have said prices will most likely increase after the
refinery closes.
The 72-year-old facility also employs 250 individuals and uses 150 contractors.
It has an annual payroll of about $30 million.
Visit bakersfield.com later today or read Thursday's Bakersfield Californian for
details on this developing story.
http://www.bakersfield.com/bnw/story/4617093p-4666528c.html