Pricing scheme charge resurfaces at oil firm
By Frank Cho
Advertiser Staff Writer
Hawai'i drivers could still be paying millions of dollars in unnecessary gasoline costs because of a scheme by the ChevronTexaco oil company to artificially inflate the price of Indonesian crude oil bound for the state's two oil refineries.
The allegation surfaced at an informational briefing yesterday for state legislators looking into charges that Chevron Corp., Texaco Inc. and the government of Indonesia structured oil prices to avoid billions of dollars in U.S. taxes.
Professor James Wheeler, co-author of a controversial report last year that contends Chevron evaded hundreds of millions of dollars in Hawai'i state taxes, said there is enough evidence to file a lawsuit against ChevronTexaco for evading state taxes. Chevron, which merged with Texaco in 2001, paid $675 million to the Internal Revenue Service to settle similar charges in San Francisco in 1994.
But Wheeler said he believes the pricing scheme is still going on, much to the dismay of some state lawmakers.
"I don't think it has stopped. When I look at the gas prices here it is astounding," Wheeler said. The state sued San Francisco-based Chevron and several other major oil companies in 1998 alleging they conspired to fix gasoline prices in Hawai'i. The state settled the antitrust suit in January without going to trial for $35 million. The state is now considering suing ChevronTexaco over the unpaid taxes, which some estimate could be more than $500 million.
Chevron is Hawai'i's largest gasoline retailer and owns one of the state's only two refineries. Tesoro owns the other refinery.
"If the facts are true as presented here, we could've been paying inflated prices for Indonesian crude at the refineries here, which were then passed on to the consumer," said state Rep. Ken Hiraki, D-28th (Iwilei, Downtown, Makiki).
Kurt Kawafuchi, head of the tax division at the state attorney general's office, yesterday said a decision on whether to file a lawsuit could come as soon as next month but declined to comment on specifics of the case.
ChevronTexaco turned down a request to appear at the hearing yesterday saying the allegations have already been addressed as part of the IRS settlement. In a letter to the committee, the company denied any wrongdoing and said it will participate in any investigation by the state
