Under pressure from the state, Tesoro has agreed to sell one of its two fuel storage terminals at the Port of Anchorage to avoid having a monopoly over the gasoline market in Alaska’s Railbelt.
Chief Assistant Attorney General Ed Sniffen says the state began investigating after Tesoro announced last year it planned to buy the Flint Hills tank farm at the Anchorage port. In addition to its Anchorage storage facilities, Tesoro also owns the state’s only gasoline-producing refinery, in Kenai. Sniffen says the state was concerned Tesoro’s purchase of more fuel storage capacity at the Anchorage port could violate antitrust laws by allowing the company to shut out competition.
“And our conclusion was, it probably would,” Sniffen said. “It would allow (Tesoro) to exercise some market power over the sale of gasoline that we were uncomfortable with.”
The state Department of Law today released terms of the agreement, which is subject to a 60-day public comment period and the approval of a Superior Court judge. The agreement says Tesoro has a year to find a buyer for Terminal 1, and if it can’t, it must lease the terminal.
Tesoro announced yesterday it has completed the Flint Hills purchase it announced late last year. It is acquiring an Anchorage terminal with a capacity of 580,000 barrels. The terminal it must sell is smaller, with a capacity of about 220,000 barrels, but one Tesoro critic says the state’s action is still important.
“It’s huge. I think it’s really critical that they did it,” says State Sen. Bill Wielechowski, D-Anchorage. He has been pressing the state to investigate Tesoro’s dominance of Alaska’s gasoline market.
“We have the refiners right here. Most of the oil comes right from Alaska. We’ve got the lowest gasoline taxes in the nation. Yet we often have the highest gasoline prices in the nation,” Wielechowski says. “So what this does is to say, ‘look we need some competition in the market.’ Because that’s really the problem.”
Wielechowski says the sale of Terminal 1 would allow a competitor to bring in fuel from a Lower 48 refinery. It would be a fraction of the market demand, but the senator says he thinks it’s sufficient to keep Tesoro’s prices in check.
Tesoro declined an interview request but said in an email the sale of the terminal allowed it to complete the Flint Hills purchase, which it describes as “a great opportunity” for Alaska and Tesoro.
“It enhances our ability to efficiently and reliably serve customers in Alaska’s interior regions through increased logistics integration from our refinery to our customers,” a company spokesman wrote.
Liz Ruskin is the Washington, D.C., correspondent at Alaska Public Media. Reach her at lruskin@alaskapublic.org. Read more about Liz here.
