WASHINGTON (AP) -- Oil industry executives rejected charges Tuesday that they manipulated gasoline supplies to increase prices. A senator said there is strong evidence that oil companies work to maintain tight markets that produce price spikes.
Opening a hearing on the volatility of gasoline prices, senators said oil industry practices of maintaining low inventories, along with growing market concentration, invited the sudden gasoline price surges that have occurred in recent years.
"Price spikes are becoming a way of life ... and not without serious consequences," Sen. Carl Levin, chairman of the Senate Permanent Investigations Subcommittee, told the oil executives.
Levin cited the findings of a subcommittee report that charged refiners had withheld supplies to force up gasoline prices during tight markets, including a 1999 BP Amoco memo that gives a blueprint of actions that might be taken to maintain high prices.
Levin said the "outrageous" internal memo considered by senior executives at BP Amoco -- now known only as BP -- outlined a series of actions that could be take to maintain high prices in the Midwest, including shipping gasoline to Canada or getting other refiners not to ship fuel into the region.
Ross Pillari, BP's vice president for marketing, called the recommendations inappropriate and said that they were not adopted. He said people who wrote the memo had been "counseled."
"They were rejected and never went anywhere," Pillari said of the suggested proposals to influence supplies and gasoline prices.
Other oil company executives told the subcommittee that recent price spikes simply reflect market conditions and that refineries have worked aggressively to maintain supplies in a tight market.
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