Amoco Pays Up

More energy over charges

Like a sharpshooter knocking off jumping rabbits in a carnival midway, the Department of Energy during the past two years has charged U.S. oil companies one by one with overcharging customers for gasoline, heating oil and other products. Last week the DOE hit its biggest target to date. Standard Oil Co. of Indiana, one of the nation's largest gasoline retailers under the trade name of Amoco, signed a sweeping $690 million consent decree settling all alleged sale-price violations since 1973.

In the decision, Amoco agreed: to pay $71 million into a special federal escrow account that will probably be used to help the poor with their fuel bills; to reimburse $29 million to large customers like utilities and local governments; to forgo $180 million in future price increases that it could have legally imposed; and to reduce gasoline and propane prices by about 2-c- per gal. Finally, Amoco said it would invest an extra $410 million in domestic oil exploration, production and refining. DOE Special Counsel Paul Bloom explained that such a complicated rebate system was necessary because it was now impossible to locate the millions of customers who had been overcharged a few pennies for every gallon of gasoline or fuel oil purchased from Amoco during the past six years.

As in past energy-overcharge settlements, the Government did not publicly spell out the exact allegations against Amoco. It is believed that the DOE audit of the company's books revealed at least $100 million in excess selling prices. The remainder of the $690 million settlement resulted from both alleged overcharging and forbidden bookkeeping practices that enabled the company to run up costs faster than permitted.

The $690 million Amoco settlement is by far the biggest in the two-year-old Government investigation of oil-company pricing. Last December, Getty signed a $75 million consent decree; in the preceding 22 months, settlements with a number of companies, including Kerr-McGee, Cities Service, Gulf, Mobil and Phillips, totaled less than $690 million. Although the firms insist that the DOE'S pricing regulations are contradictory, confusing and capricious, the profit-rich energy companies are unlikely to attract much sympathy. Amoco's earnings jumped 70% in the last quarter of 1979 and 40% over the full year. Said Energy Securities Analyst David Snow of A.G. Becker in New York: "The Government is hitting the oil companies over the head at a time when it knows they are well able to pay."

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