A coalition of 18 Midwest municipal gas utilities has accused five major natural gas producers of engaging in activities to “control and unlawfully” raise the price of gas in the United States in restraint of trade or commerce.

The charges alleging violations of the Clayton Act and Sherman Act were contained in a lawsuit filed in U.S. District Court for the District of Columbia Tuesday. Thirteen municipal gas utilities in Kansas, two in Missouri, and one each in Indiana, Texas and Illinois are parties to the complaint, which was brought against ExxonMobil Corp., BP, Royal Dutch/Shell Group, ChevronTexaco Corp. and ConocoPhillips Corp.

The municipals “have been seeking for a number of years to supply the natural gas requirements of users located within their respective municipalities at reasonable prices, but have been thwarted in their efforts by [the gas producers], who have entered combinations or conspiracies in restraint of trade or commerce, and who have also acted to monopolize and increase the wholesale prices for natural gas available to the [munis] in the market,” the 13-page lawsuit said.

The five majors produce over 70% of the total natural gas used in the United States, it noted. This “ownership of the available supplies of natural gas gives them market power to run up the price for firm natural gas supplies and to reduce or exclude supplies for a sustained period of time, and thereby increase wholesale prices” to munis, the complaint said.

The Midwest munis further accused the producers of maintaining discriminatory price differentials between the sales of gas to them at wholesale and direct sales to large retail customers.

The gas munis have asked the court to grant them monetary relief equal to three times the damages allegedly incurred by them as a result of the producers’ alleged antitrust violations under the two acts. Moreover, they are seeking an order to permanently enjoin the producers from carrying out any more of the alleged violations.

The municipals also hinted strongly that the producers, who were involved in the September 2003 National Petroleum Council’s (NPC) supply-demand study, painted a false picture in that report. The producers agreed in the report that “current and higher gas prices are the result of a fundamental shift in the supply and demand,” but the report gave no evidence that the existing total resource base of natural gas in the United States and Canada has shrunk since late 1999, when the previous NPC gas report was issued, the lawsuit said.

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