Attorney General Hardy Myers announced today that the Oregon Department of Justice filed a lawsuit in federal district court seeking to prevent the proposed merger between BP Amoco and ARCO on the terms currently negotiated by the parties. The lawsuit alleges that the proposed merger violates provisions of federal antitrust laws.
"Gas prices in Oregon are already high," Myers said. "The Department filed the lawsuit because of concerns that the proposed merger would add to the upward pressure on the price of gasoline in Oregon. The merger as proposed certainly provides no incentive for lower gasoline prices in Oregon now or in the future."
BP Amoco and ARCO, as the two largest competitors for the exploration and production of Alaska North Slope (ANS) crude oil, account for 72 percent of the crude oil produced in Alaska. BP Amoco and ARCO also own or control nearly 80 percent of the shipping capacity needed to transport crude oil from Alaska to locations in the United States, including refineries in Washington and California. Oregon has no refineries and relies almost entirely on Washington and California refineries for its gasoline supply.
Oregon's lawsuit alleges that, because the transport of ANS crude oil is so expensive and complicated, West Coast refiners do not have a practical option of hiring a ship to carry ANS crude purchased from Alaska.
Oregon further alleges that the proposed merger between BP Amoco and ARCO is a violation of federal antitrust laws because it may substantially lessen competition for the exploration, development, production and sale of crude oil used by refiners in Washington and California. (Crude oil is the principal product used to make gasoline.)
"If ARCO is eliminated as a separate entity competing with BP Amoco, BP Amoco's dominance over Washington and California refiners will continue to increase. These refiners supply most of Oregon's gasoline," Myers said. "Under the current terms of the merger, refiners might be forced to pay higher prices because one of the primary factors that determines price - namely, competition -- has been substantially reduced."
Oregon filed its suit jointly with Washington and California today in US District Court in San Francisco. The lawsuit asks the court to issue a preliminary injunction preventing the merger's completion. The Federal Trade Commission filed a similar suit in the same court on February 4th.
Kristen Grainger, (503) 378-6002.