Texaco Says It Will Fight U.S. Overcharging Claim

Texaco says it will continue to fight a government finding that it owes hundreds of millions of dollars for willfully overcharging customers for its domestic crude oil in the 1970s.

The company said it protested an Energy Department order to refund $235 million, plus $568 million in interest, for violating federal price controls in force at that time.

The government order, issued last Thursday, cut back an original claim filed in May, 1979, that Texaco owed about $888 million, consisting of $743 million plus interest, Texaco said.

The company said it will ask the Federal Energy Regulatory Commission to review the latest Energy Department order and indicated that, if necessary, it will also take the issue to court.

No payments would be required until the matter is finally resolved.

Texaco noted that the latest order “made substantive new rulings which are favorable to Texaco and suggested that the agency re-examine its position and revise its claims in light of these rulings.”

Under federal price control regulations in force in the 1970s, the price of oil sold by companies was to be determined on the basis of when it was discovered.

Companies were to charge less for oil coming from long-held properties--where exploration and development costs had presumably already been fully or mostly recovered--and were allowed to charge more for “new oil” found on properties where more recent exploration and development costs had been more expensive. President Reagan scrapped the regulations in 1981.

Texaco said Friday that it “continues to vigorously contest the allegations that the DOE’s domestic crude oil price control regulations were improperly applied by the company in the 1970s.”

“The allegations are particularly disturbing, given the key aspects of the applicable DOE regulations have been judged by the agency itself to have been ambiguous,” the statement added.

Texaco is the nation’s third-largest oil company after Exxon and Mobil.