For many years, the State of Alaska has been trying to persuade Exxon Mobil Corp. and BP PLC to invest with the state in a natural gas pipeline that would be built from the North Slope Oil Field to Valdez in the southern part of the state, where the companies’ natural gas would be liquefied and loaded onto tankers. But BP and Exxon Mobil prefer an alternative, longer pipeline over which they would own a larger share that would run through Canada to the Midwest. According to the companies, such a pipeline would deliver the natural gas directly to markets and be less risky than the state’s proposal. As a result of the disagreement between the state and the companies, there is currently little natural-gas production generated from the North Slope even though U.S. natural-gas prices are soaring.
So, what’s Alaska to do? Compromise and cut a deal with the owners of the natural gas? No way, not when the state can hire David Boies to come up with an implausible lawsuit against the companies (W$J article here) that plays on the public’s resentment of greedy capitalists.
Let’s see if we have Alaska’s lawsuit right. Exxon Mobil and BP, which generate less than 10% of the U.S. natural gas production, are refusing to enter into the pipeline deal that the state favors (and which might make the companies more money now, but maybe not) because the price of natural gas in the future will probably be higher than it is now. Thus, the companies prefer to “warehouse” their gas for the time being so that they can make more money in the future than they would make now.
That’s a lawsuit? Sounds as if Exxon Mobil and BP are making either a good or bad business decision to me (too early to say how it will turn out), but that should not be the basis of a lawsuit. Unless, that is, the purpose of the lawsuit is to punish those companies for having the right to make that decision in the first place.
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That’s a lawsuit?
Yes, if there actually was such an agreement which would be a conspiracy under the Antitrust Laws.
Section 1 of the Sherman Act reads, “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.”
And, fortunately, conspiracies can be proven by either direct or circumstantial evidence.
Exxon can, on its own, decide with whom it does business. BP, on its own, can do the same. But, if Exxon and BP jointly agreed not to do business with this outfit, that would be a conspiracy.
Moe, Exxon and BP have an agreement to develop an economic pipeline to the Midwest. They both oppose a competing, uneconomic gas liquification facility. That is not a conspiracy under any reasonable interpretation of the Sherman Act.