Chevron
questions state
suit’s timing

The oil company suggests
a link between the lawsuit and
Gov. Cayetano's bid
for re-election

By Rob Pewrez
Star-Bulletin

Chevron Corp., Hawaii's gasoline market leader, is questioning the timing of the state's antitrust lawsuit against Chevron and 12 other industry companies.

"Chevron finds it curious that the state has elected to file a lawsuit without further investigation this close to the upcoming general election," the company said in a statement yesterday.

Gov. Ben Cayetano, who is up for re-election next month, announced the filing of the lawsuit Thursday.

It accuses Hawaii's two refiners and major wholesalers of systematically overcharging local dealers and consumers for the past decade.

The state is seeking at least $500 million in damages.

Cayetano said the timing was related to a 1995 law allowing the state to hire outside counsel on a contingency basis, and the recent completion of a preliminary investigation into whether the state had enough to go forward with a lawsuit.

In a key point in the complaint, the state alleges that Chevron met with competitors to discuss an agreement to keep Hawaii wholesale prices artificially high and warned the companies of retaliation if they tried to compete on price.

Chevron yesterday called the charges preposterous.

"The meetings referred to in the complaint never happened," the company said, vowing to vigorously defend itself against the charges.

Like Hawaii's other refiner, Tesoro Petroleum Corp., Chevron noted that the attorney general's office has investigated the industry several times in the last 10 years and found no evidence to justify any action.

"There are good market-based reasons why gasoline costs more in Hawaii than on the mainland," Chevron said.

"It simply costs more to do business in Hawaii, and that cost difference is reflected not only in the price of gasoline, but also in most other goods and services."

But Spencer Hosie, a San Francisco antitrust lawyer helping the state with its case, said the cost of producing gas in Hawaii is no more than the cost of making it on the West Coast.