The Department of Energy charged seven major oil companies yesterday with illegally overcharging consumers $1.7 billion for crude oil.
The overcharges, which took place over the last six years, resulted from the companies improperly reclassifying low-priced oil so that it sold for more than twice the amount permitted by government price controls, the department said.
However, Paul Bloom, the department's special counsel for compliance, stressed at a press conference yesterday that the DOE complaints are administrative and "do not allege any willful or criminal violations."
Bloom said DOE would seek refunds from the companies for the alleged overcharges, including, if possible, payments for consumers who purchased products from the companies named.
Yesterday's announcement brings DOE's enforcement actions against the nation's 34 leading refiners to a total of about $3.5 billion and potentially is the largest overcharging case the agency has brought against the oil industry.
Bloom vigorously denied a suggestion that the timing of DOE's announcement had any relation to the White House's effort to generate support for President Carter's controversial oil decontrol program.
Texaco, one of the nation's largest oil companies, led on DOE's list of overcharges with $888.3 million, while Gulf Oil was alleged to have illegally earned $577.9 million. Other companies named were Standard Oil Co. of California for $101.6 million, Atlantic Richfield for $42 million, Marathon Oil for $29 million, Standard Oil of Indiana for $24.1 million and Standard Oil of Ohio for $16 million.
Most of the oil companies strongly denied the charges, issuing statements critical of the Energy Department's enforcement effort. Standard of Indiana spokesman Mike Thompson said because of Bloom's disclosure "one is led to seriously question whether the DOE wants justice or headlines."
Marathon Oil said DOE's charges are "completely untrue" and that it would begin an appeal.
Standard Oil of California said it had met DOE's regulatory requirements but was withholding comment.
There was no immediate comment from Atlantic Richfield and Standard Oil of Ohio.
Texaco said DOE's allegations are "a further attempt to retroactively interpret and enforce ambiguous regulations." Gulf said it "categorically denies" DOE's charges, and will appeal the case.
The companies have 40 days to appeal within the agency.
News of DOE's overcharge complaint did not depress any of the companies' stock trading on Wall Street yersterday. Texaco and Gulf remained unchanged, while the five other companies' stocks rose in value. The Dow Jones industrial average yesterday remained unchange.
Bloom, who was named special counsel in December 1977 to head DOE's audit of the nation's 34 largest refiners, said that so far DOE's enforcement effort has netted $126 million in collections. Many of the department's cases are in litigation.
He said that the majority of the alleged violations resulted from improperly certifying oil properties producing "old oil," selling for around $5 a barrel, under higher-priced categories. Old oil is produced from wells drilled before 1973.
Bloom said the companies' other major cause for violations stems from improperly classifying wells as "stripper wells," producing oil selling at world prices under DOE rules. Stripper wells produce 10 barrels a day or less.
Asked about oil industry allegations that DOE's complex oil regulations are often vague or subject to retroactive rulings, Bloom said that DOE's record in the courts suggests the opposite. DOE has won 37 of the 45 appeals filed by oil companies in the courts.
DOE's audits of the major oil companies' transactions during and since the 1973 Arab oil embargo have been going on since December of 1977. DOE had earlier charged some of the companies with violations totalling $500 million, but, Bloom said yesterday, the companies have continued the same pricing practices so that the overcharges now total $1.7 billion. CAPTION: Picture, Reps. Toby Moffett and Barbara Mikulski (D-Md.) meet for committee's oil vote. AP