BP Amoco, it turns out, did the same in the late 1990s in order to boost the price of gas and oil on the West Coast. A 1995 e-mail correspondence by two BP managers, Robert Aicher and Linda Adamany, discussed "shorting the West Coast market" to achieve "West Coast price uplift scenarios," according to federal court records and other documents obtained by the daily Oregonian.

Instead of exporting Alaskan crude oil to refineries in the United States, BP Amoco sold it for less on Asian markets. The BP managers discussed the benefits of sending oil to Asia at a lower "netback"--the sales price minus transportation costs--than it could get for the same crude on the West Coast.

"Even if FE [Far East] netback is slightly below WC [West Coast] netback, we may choose to export some to FE in order to 'leverage up' our WC ANS [Alaska North Slope] prices," Aicher wrote. Adamany termed the strategy "a no-brainer."

"When they say 'leverage up,' what does that mean?" asked economist Preston McAfee, who was hired by the Federal Trade Commission to analyze the proposed merger of BP and Atlantic Richfield. "It means, 'We're going to jack up the West Coast price by taking some of our production and selling it at a lower price elsewhere."

McAfee revealed that BP Amoco also used a computer model called "the optimizer" to manipulate West Coast prices. The computer determined the "trigger points" at which refiners would switch to other sources of crude oil.

"BP has successfully used the optimizer to set noncompetitive, discriminatory prices in the market place for many years," McAfee wrote. He noted in his report there was "overwhelming evidence" that the company manipulated West Coast oil prices.

Oil companies, in turn, have blamed the Northwest's higher prices on production cutbacks by the Organization of Petroleum Exporting Countries, refinery fires, taxes, and pipeline disruptions.
 
 
Related articles:
Cause of energy crisis: monopolies' profit drive
Nationalize the energy companies!
Companies in Washington State profit from rate increases and plant closings
 
 
 
Front page (for this issue) | Home | Text-version home