The federal government yesterday charged nine of the nation's largest oil companies with overcharging their customers for natural gas liquids by about $1 billion.
The Energy and Justice departments filed suit against eight of the firms yesterday, and asked the U.S. District Court here to consolidate those suits with a similar action filed earlier against Exxon.
The suit alleges overcharges of at least $233.91 million by Texaco, $102.25 million by Phillips, $96.93 million by Standard Oil Co. (Indiana), $90.15 million by Shell, $69.18 million by Cities Service, $20.52 million by Atlantic Richfield and $11.44 million by Gulf. No dollar amount was given for Mobil. In the earlier action, Exxon was accused of $316 million in overcharges.
The companies denied the accusations.
Yesterday's action brings the total amount of oil industry overcharges alleged by DOE in various legal and administrative actions since December 1977 to $2.2 billion for a variety of products. The government contends the oil companies misinterpreted the confusing oil pricing regulations that grew out of the 1973 oil crisis.
The latest allegations concern natural gas liquid products such as propane. butane and natural gasoline, which are used for such basics as home heating oil, petroleum feed stocks and gasoline blending agents.
The government wants the courts to order the oil companies to refund the alleged overcharges. The $1 billion figure is based on a partial audit, and DOE spokesman Paul Bloom said the final overcharge figure could be much higher when the audits are completed.
Blcom said that if the government wins its case either the court or DOE would set up administrative procedures for consumers to file refund claims. Any overcharges not claimed by consumers would go to the U.S. Treasury, Bloom said.
The oil industry reacted angrily to the latest suit, pointing out that a similar case involving alleged over charges was recently won by five oil companies at the Temporary Emergency Court of Appeals, a special court set up by the government to handle appeals of complex pricing regulation cases.
"We have not overcharged the consuming public," Phillips Petroleum Co. said in a statement. "This appears to be another effort at retroactive regulation."
A Phillips spokesman said the company had not seen the complaint as of yesterday afternoon, and was particularly irked that DOE notified the press in advance of the suits, but "didn't have the courtesy to supply us with the complaints."
"DOE and its predecessors have been fully aware since 1973 of how Phillips handles its natural gas liquids," the company statement continued. "DOE has had its auditors in residence here for five years."
Phillips called yesterday's government action "primarily an effort to permit DOE to make public accusations of alleged huge overcharges even before it has completed its audit of the company."
Exxon U.S.A. Senior Vice President O. L. Luper said, "We believe all our pricing actions have been in compliance with the regulations."
"In any event," Luper said, "this is not a new issue. Exxon has been trying to resolve both administratively and in the courts differences in interpretation of the regulations for pricing natural gas liquids."
DOE set up an office of special counsel in December 1977 to handle its overall investigation of industry compliance with pricing regulations issued after the 1973-74 Arab oil embargo. Bloom, who heads this office, said yesterday's action was the first against a cluster of refiners at the same time on related issues.
Bloom's office has until December 1979 to complete its comprehensive audit of the 15 largest oil companies.
In this latest action stemming from those audits, the companies are charged with overcharges in six different areas in an alleged effort to boost the regulated prices of natural gas liquids.
For their part, the oil companies claim they have long sought, unsuccessfully, clarification from the government on how to apply the pricing regulations to their operations.