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Ky. attorney general issues subpoena to oil firm
Friday August 22, 5:04 pm ET

Ky. attorney general issues subpoena to Marathon Oil; officials ask federal gas price probe

LOUISVILLE, Ky. (AP) -- Kentucky's attorney general has issued civil subpoenas to Marathon Oil Co., as he explores a possible lawsuit against the petroleum giant.

Also, several Kentucky officials have asked the Federal Trade Commission and the U.S. Department of Justice's Antitrust division to review the 1997 merger of Marathon and Ashland Oil to gauge its effect on gas prices in Louisville and the rest of Kentucky.

The moves Thursday night came after a summer gas price spike in Kentucky, which left drivers paying as much as 18 cents more per gallon in Louisville than in other parts of the state.

Marathon Oil has 45 days to respond to the subpoenas.

Attorney General Jack Conway said he'll decide whether to sue Marathon after studying the company's response.

"It is squarely on Marathon," Conway said. "If our consumers are being treated in an inappropriate way ... maybe there's something I can do."

Angela Graves, a spokeswoman for Marathon Oil Co., in Findlay, Ohio, said Friday the company had not received the subpoenas, nor had it heard from Kentucky's governor and attorney general.

"They have not contacted Marathon for any information," Graves said. "We will cooperate with their investigation."

The letter from Conway, Gov. Steve Beshear, Louisville Mayor Jerry Abramson and U.S. Rep. John Yarmuth to the FTC and Justice Department asks that federal authorities review whether the Marathon-Ashland merger has had an anticompetitive impact on the city and state and to take actions to return competition to the market.

Messages left Friday with the FTC and Justice Department were not immediately returned.

Marathon and Ashland merged in 1997, but Ashland sold its stake in Marathon Ashland Petroleum in 2005 to the Ohio-based oil company.

Jim Vitak, a spokesman for Ashland Inc., said if subpoenaed, the company will cooperate, but it currently has no stake in the oil and gas market in Kentucky.

"We're out of it," Vitak said.

Conway's and Beshear's offices studied gas prices in Louisville, northern Kentucky near Cincinnati and Chicago and concluded that Louisville's wholesale prices were nearly a dime higher than the other two markets from July 2006 through July 2008 .

The study also looked at a period from June 12 through July 2, when gas prices in Louisville spiked. Officials concluded that wholesale prices were 11 cents higher than in northern Kentucky and 20 cents higher than in Chicago during that period.

Chicago, Louisville and northern Kentucky use a specially formulated blend of gas to help control air pollution. But Abramson said that doesn't explain why the city's gas prices were so much higher than other areas using the same gas.

The fluctuation in oil prices on the market doesn't explain the spike, Beshear said. The investigation is to find out why Louisville's gas was higher than other markets, the governor said.

"That's the real issue here," Beshear said.

Yarmuth, D-Ky., was co-sponsor of a measure that allows the FTC to investigate possible price gouging by oil companies. Yarmuth said Friday the provision had not been used by the administration of President George W. Bush, whose private business background involved oil companies.

Yarmuth said he wasn't expecting either the current FTC or the Justice Department to invoke the law now.

"I'm not optimistic at all," Yarmuth said.

Source: Associated Press

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