Oklahoma Charges BP With Propane Price-Fixing

Attorney General claims unfair and deceptive acts

June 2, 2009
Gasoline isn't the only fuel whose price can be fixed. In Oklahoma, state Attorney General Drew Edmondson has accused petroleum giant BP America of a 2004 scheme to artificially drive up the price of propane.

The state's suit accuses BP of "unfair and deceptive acts in attempting to manipulate and manipulating the commodities markets for propane...with the effect of increasing prices in Oklahoma."

The state accuses BP of orchestrating a successful strategy to corner the February 2004 propane market and manipulate prices for the commodity. The state alleges, by the end of that month, BP owned 88 percent of all propane in the Texas system, which is the primary source for the gas in Oklahoma.

According to the complaint, BP's actions had increased the price of propane more than 40 percent from Feb. 4 to Feb. 25. In contrast, the state of Washington, which relies on an Alaskan system for its main propane supply, saw prices decline during that same period.

Propane is a multimillion dollar industry in Oklahoma and, according to the state's complaint, energy systems designed to burn propane cannot run on other fuels.

"Oklahomans who use propane systems to heat their homes and power their businesses were held hostage by BP's scheme and had no other choice but to buy propane at the artificially higher price," Edmondson said. "Propane is heavily used by our state's agriculture community as well, and spikes in prices can have a significant impact on Oklahoma farmers."

The state's civil lawsuit, filed in Oklahoma County District Court, seeks to prohibit BP from engaging in similar conduct. The suit also seeks consumer restitution and penalties. Defendants in the suit are BP America and subsidiaries BP Corporation North America Inc., BP Products North America Inc. and BP American Production Co.

Although BP has already settled similar federal and class action suits, few if any Oklahoma consumers were included in those cases. Because of the complexities of commodities and futures law, the state is consulting with legal experts in that field regarding the lawsuit.

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