Gulf Oil to Pay $142 Million to Settle Suit

A federal judge has approved an out-of-court settlement in which Gulf Oil, now part of Chevron, agreed to pay its customers $142 million plus interest to settle a dispute over oil prices.

U.S. District Judge Gabrielle McDonald also dismissed a lawsuit that Gulf filed against the Energy Department in a dispute over a government order requiring it to deliver oil to a small refinery in Alabama in 1979. Gulf claimed that the refinery abused government regulations by turning around and selling the shipment to a major Gulf competitor.

McDonald’s consent order Tuesday came after lawyers reached a negotiated package of settlements in a series of lawsuits involving Gulf, said John R. Knight, a Houston attorney for the oil company.

Gulf was one of several major oil companies that the Energy Department sued, alleging that the firms violated regulations that dealt with allocations and oil prices. Those regulations were abolished when oil prices were decontrolled in early 1981.

Forced to Sell Oil

McDonald’s order also ended a suit that Gulf filed against Marion Corp. and the Energy Department in 1982, three years after the federal government forced Gulf to sell more than $9 million worth of crude oil to Marion’s Alabama refinery.

Under federal regulations then in effect, major oil companies were required to supply small refineries with crude oil if they were running short. Such regulations have since been rescinded.

Gulf alleged in its suit that Marion was not eligible under the regulations to receive the crude and that the smaller company abused the laws by forwarding the crude shipment to Exxon, Marion’s primary supplier.

The suit also claimed that the Energy Department unfairly refused Gulf’s demand that an equal amount of the oil shipped to Marion be returned.

Marion sought bankruptcy court protection from creditors shortly after Gulf filed its suit, according to court documents. Gulf claimed that that action reduced its chances of collecting damages from Marion.