Alaska bill against fuel price gouging has hearing

JUNEAU, Alaska — A bill aimed at gasoline refiners that would ban price gouging received a hearing Tuesday before a skeptical Senate committee.

Sen. Bill Wielechowski said his proposal is a response to the “unconscionable” disparity between the prices Alaskans pay for gas and heating fuel compared to rates elsewhere on the West Coast that have traditionally been similar.

Wielechowski, D-Anchorage, told the Senate Labor and Commerce Committee that evidence suggests Alaska’s only major 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.

Under the proposal, prices could not exceed 10 percent of those charged by Seattle-based refiners. Alaska’s attorney general would be allowed to investigate claims against companies refining more than 1 million gallons of fuel per year, and companies guilty of price gouging would face a penalty equal to at least 10 times the profit gained from the practice.

Sen. Cathy Giessel, R-Anchorage, said the proposal misses its target.

She said it amounts to a “jobs bill for attorneys” by setting up an environment for constant lawsuits, and that it would drain companies providing Alaskans a much-needed product. She also said Seattle isn’t a fair comparison. Tesoro has exorbitant transportation costs to get crude oil from the North Slope and elsewhere, she said, and they also run their production facilities on cheaper fuel.

“This appears to vilify refineries by saying that they’re ‘unconscionable’ and ‘disreputable,’” Giessel said.

Tesoro did not testify but provided a letter to members of the committee in advance of Tuesday’s hearing, saying that past state investigations of price gouging have gone nowhere and that Alaska’s gas market is 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 but found no evidence of illegal price-fixing among sellers, even though prices dropped precipitously in the Lower 48 and stagnated in Alaska at that time. Another inquiry by the attorney general’s office in 2002 also found no illegal activity.

SB28 was held pending further testimony. It has little chance of passing.

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

1 Comment

  1. mark

    Alaska residents get several thousand a year in royalties for both gas produced and pipeline leases. What I don’t understand is that if the refineries are in Alaska and the pipeline is in Alaska. Why then is Tesoro inflating the cost of oil it receives because it would seem that shipping cost for raw material would be much lower. They have a point.

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