Reps. Toby Moffett (D-Conn.) and Benjamin S. Rosenthal (D-N.Y.) have asked the Justice Department's Antitrust Division to look into a proposal by Mobil Oil Corp. for a joint project by it and other leading oil companies to develop oil shale. A headline in the first edition Saturday incorrectly identified the agency that had been asked to look into the proposal.
Two members of Congress have asked the Justice Department to investigate whether a proposal by Mobil Oil Corp. to form a massive joint industry effort to develop shale oil production violates antitrust laws.
The proposal "is fraught with antitrust implications," according to Rep. Toby Moffett (D-Conn.) and Rep. Benjamin S. Rosenthal (D-N.Y.), who wrote to the Justice Department's antitrust division chief, William F. Baxter. Moffett is the chairman of the House subcommittee on environment, energy and natural resources, and Rosenthal is chairman of the House subcommittee on commerce, consumer and monetary affairs.
"We feel that this is a premature reaction on the part of the two congressmen," said Mobil representative John Flint. "The company has recognized from the start that one matter which would have to be addressed would be antitrust considerations and guidelines. At this point, though, the only suggestion made by Mobil Chairman Rawleigh Warner is that the group decide if something in the area of commercial shale development is possible and desirable from all viewpoints," including the legal one, he said.
Earlier this week Mobil issued a statement saying that it had proposed a joint effort among oil companies with government involvement to address the technological and economic possibilities for the production of oil from shale in large quantities.
"A number of companies have indicated their willingness to attend a preliminary meeting to explore the concept of a joint project," the statement said. Mobil's initiative comes at a time when all but one oil shale project have been dropped because such production does not now appear to be economically viable.
Moffett and Rosenthal attached a copy of a letter that they said had been sent by Warner to major oil companies. Moffett and Rosenthal said it apparently had been sent to Exxon Co., Gulf Oil Corp. Chevron USA, Amoco, Union Oil Co., Tosco Corp., Occidental Petroleum Co., Tenneco Inc., Shell Oil Co., Conoco Inc. and Texaco Inc.
"Not only are these companies the major holders of shale lands and technology, but they include six of the 10 largest companies in the United States and eight of the 10 largest oil companies," the congressmen wrote. They said that the letter suggests that Mobil foresees development of a commercial project, not just a research effort.
"This plan deserves a full-scale investigation by both the Justice Department and the Federal Trade Commission before any such meeting takes place to determine if either the civil or criminal antitrust laws have already been violated or will be violated if these major companies move ahead in concert as Mobil suggests," they wrote.
The letter from Moffett and Rosenthal also was critical of the Synthetic Fuels Corp., which it said had apparently encouraged Mobil. Doing so is "a position that alone could frighten already skittish investors away from the projects of the smaller competitors," they wrote.