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The Honolulu Advertiser
Posted on: Friday, April 26, 2002

Tesoro can't restrict Alaska gasoline probe

Associated Press

ANCHORAGE — The Alaska Supreme Court has ruled against Tesoro Petroleum Corp. in its attempt to limit the scope of the state attorney general's gasoline price-fixing investigation.

Tesoro had appealed a lower court ruling requiring the company to turn over scores of internal documents, and that state officials had the right to show the documents to a San Francisco law firm hired to help with the probe.

The high court, with the justices split 3-1, affirmed Superior Court Judge Peter Michalski's ruling that the state wasn't seeking an "unreasonable and oppressive" stack of records. The majority also found that the law firm of Hosie, Frost & Large qualified as an "authorized employee" of the state and therefore may see the documents from the investigation into what Attorney General Bruce Botelho calls the "Alaska paradox."

The attorney general's office is investigating Alaska gasoline prices, which are among the highest in the nation despite the fact that Alaska is home to the largest oil fields in North America and has enough local refining capacity to meet demand.

As part of the investigation, Attorney General Bruce Botelho requested documents from numerous oil refining, marketing and retailing companies seeking records about pricing, profits, marketing and strategy.

Tesoro led a group of companies in resisting the demands. Tesoro, which has both a refinery and dozens of gas stations in Anchorage and elsewhere in the state, said it was being forced to spend hundreds of thousands of dollars to compile hundreds of boxes of possibly irrelevant records dating back 10 years or more to satisfy the state.

The company also objected to the state sharing the records with Hosie, Frost & Large. The second point is well-founded, wrote Justice Warren Matthews, who noted in a dissent that the law firm also had represented Hawai'i in an antitrust lawsuit against Tesoro and other companies. Lawyers for Tesoro said the firm possibly could gain records from the Alaska inquiry that it was denied in Hawai'i.

Ron Noel, general counsel for Tesoro in Alaska, said Wednesday that the Supreme Court ruling was mainly moot, as the company already had turned over all requested records to the state by the middle of last year.

The company denies it has conspired with other companies to limit competition and keep fuel prices high in Alaska, Noel said.

"We're just waiting to hear from the state," he said, summing up the current status of the inquiry.

Jack Griffin, supervisor of the Alaska attorney general's oil, gas and mining section, said the investigation continues. He said the focus is on wholesale fuel pricing rather than retail prices consumers pay. He also said the state still has the San Francisco law firm on contract, as well as a California petroleum economist and another law firm in Washington, D.C.

Griffin said there's no set date for finishing the probe, which could result either in the matter being dropped or, as in the case of Hawai'i, the state suing the oil companies. Hawai'i recently settled its $2 billion claim, though for only a small fraction of that amount. Now legislators there, upset at what some regard as evidence of exorbitant oil company profits, are considering bills to make Hawai'i the first state to regulate gasoline prices.

Griffin stressed that Alaska officials are not accusing fuel suppliers of illegal conduct.

"People have complained about the price of gasoline," he said. "We're trying to find out if the price of gasoline is the result of companies breaking the law, or the result of normal market forces."