Nine major oil companies were accused by the Energy Department yesterday of overcharging customers by nearly $1.2 billion through violations of complex regulations between 1973 and 1976.
The allegations are contained in one of a series of administrative actions filed by DOE's Office of Special Cousel, which has until the end of this year to complete audits of the 15 largest oil companies and their compliance with a complex set of pricing and allocation rules put into effect after the 1973 oil crisis.
Yesterday's filings, called notices of probable violation, bring the total allegations of overcharges by the top 15 companies to more than $6.4 billion. Several billion dollars in additional overcharges are expected to be alleged by DOE before the end of the year. But under $300 million of that total has been ultimately agreed to as being overcharges by the industry. The remainder is being fought over in various appeals.
In yesterday's action, DOE accused the following companies of miscalculating their legal selling prices by passing along certain "nonproduct" costs to consumers through price increases that should not have been passed on:
Mobil Corp., $274 million; Shell Oil Co., $211 million; Standard Oil Co. (Ohio), $179 million; Sun Co., $130 million; Chevron USA, $117 million; Gulf Oil Corp., $80 million; Amerada Hess Corp., $88 million; Atlantic Richfield Co., $58 million, and Conoco Inc., $46 million.
As they have in the past, the companies denied the overcharges, contending their pricing strategies were based on legitimate interpretations of the complicated regulations.And DOE is careful to point out that it is alleging no deliberate overcharging, instead contending that the overcharges were merely the result of disagreement over interpretation.
For example, in the particular cases cited yesterday, the companies were accused of passing on the cost of building certain pollution control equipment directly to consumers through price increases. Under federal rules, the cost of installation of equipment such as vapor control systems at retail stations, beyond what was needed to meet federal pollution control standards, cannot be passed on to consumers through price increases.
There are also allegations of doublebilling -- attempting to pass on legitimate costs on two separate occasions.
In New York, Mobil said "we do know that we are in full compliance with the Energy Department's regulations and we are confident that we will be fully vindicated -- either through Energy Department administrative review procedures or, if necessary, in the courts."
A Sun Oil spokesman said, "We believe our interpretation is proper and we're willing to defend it, including going to court."
The comments from other oil companies were along the same lines. They basically contend that their interpretations of the original regulations will be upheld.
In California, a Chevron spokesman called the DOE contentions "unfounded and unsupportable," and added that "even if some on the claims do turn out to be supportable, this wouldn't necessarily mean that U.S. consumers have been overcharged for petroleum products."
The Energy Department has sought remedies for the alleged overcharges in several different ways.