Argentine oil firms deny collusion on fuel prices

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Argentine oil firms deny collusion on fuel prices

By Guillermo Haskel

BUENOS AIRES, March 10 (Reuters) - Argentine oil firms on Friday denied accusations they colluded to overcharge consumers billions of dollars for gasoline, blaming high prices on taxes, world oil-product prices and a thriving black market.

Average after-tax gasoline prices in Argentina are two to three times higher than in the United States and the government, many industries and consumers fear that higher international crude prices may herald yet another rise in Argentina.

Argentina's ombudsman Eduardo Mondino on Tuesday promised legislators, farmers and consumer groups to probe criticism that the oil firms were abusing their power to push up prices.

"Whatever the international crude price is ... fuel prices always go up" in Argentina, the ombudsman said.

But Juan Jose Aranguren, an official of Argentina's Chamber of the Oil Industry (CIP), strongly disagreed.

"There is no agreement not to lower prices," he told a news conference.

Argentina's fuel market is concentrated in the hands of a few heavyweights. Spain's Repsol-YPF controls half the market, and Shell and Esso are the next two largest players.

The government says the companies steeply increase gasoline prices when international crude prices rise but are less diligent when world prices fall.

But Aranguren said that was a "simplistic" assertion. World oil prices are just one of several factors taken into account in setting fuel prices, which ultimately are set by free market forces, he said.

"The hydrocarbon sector is one of the few Argentine sectors which is totally deregulated, without any kind of protection. It is linked to the world oil sector, and so not only domestic but also international players take part in price formation," he said.

Aranguren also complained about taxes, which he said account for about 58 percent of the price of high octane gasoline in Argentina but only 15-20 percent in the United States.

He added that the black market accounted for about five percent of the country's total annual turnover of $13 billion for refining and distribution operations.

CIP President Jose Maria Ranero Diaz said that over the past 10 years, oil companies have invested $25 billion in Argentina, of which $6.0 billion went to refining and distribution.

Average profitability for this business segment "does not reach 5 percent. Shareholders don't see the money they invested yielding what they can get in a bank," he said.

Two deputies and some 20 industrialists and consumer group advocates this week presented the ombudsman with a 16-page document accusing oil companies of dodging taxes as well.

Official figures showed an increase of more than a million gasoline-powered cars between 1992 and 1998 and yet oil firms claimed lower fuel sales over that period, according to the document, which concluded there was "a strong (tax) evasion process.

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