Image From ..latimes.com
The U.S. Federal Trade Commission has given its approval to Tesoro Corp. to buy the BP Refinery in Carson, CA, and the state Attorney General and the California Energy Commission have given the green light too.
According to the AG, the Energy Commission will monitor gas prices, volume and refinery capacity and "a deal" with the company, Reuters reports is said to "provide for safeguards against price spikes."
Tesoro is spending $2.38 billion to buy the BP refinery and its southern California assets. The BP Carson refinery capacity is 266,000 bpd.
With the acquisition the deal will more than double Tesoro's refining capacity in California.
"We are pleased the FTC has concluded its review and we can close this transformational acquisition as planned," said Tesoro Chief Executive Greg Goff in a statement.
Tesoro plans to combine the Carson plant with its other Los Angeles area refinery, adjacent to the Carson plant, in a move that it says will help bring manufacturing costs down by about $250 million. Tesoro also owns the Golden Eagle refinery in the San Francisco Bay area, according to the Wall St. Journal.
In a statement, the FTC said conditions had changed since the 1990s and early 2000s, when the commission challenged acquisitions into the market for California-grade gasoline, which must comply with the state's stringent emissions standards. The FTC said it had previously been concerned that West Coast refineries were operating at near capacity, and the commission believed this would allow one refiner to cut production and drive prices higher.
But that is no longer the case, the commission found. More fuel-efficient vehicles and use of renewable fuels means that demand for California grade gasoline has fallen and there is refining capacity to spare. And while the sale means one less refining company working in California, the number of refiners making gasoline on the West Coast will be unchanged at seven.
The commission noted that its decision shouldn't be taken as blanket approval for future acquisitions in California.
"The Commission is fully committed to using all the tools at its disposal to protect competition and consumers in this important economic sector," it wrote.
The California Attorney General's office said last week that Tesoro agreed to conditions aimed at keeping employment and gasoline-production levels steady after it takes over the refinery. Under the agreement, Tesoro agreed not to lay off any workers at either Los Angeles area refinery for two years. The company has also agreed to keep up its level of California blend gasoline.